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Russia unveiled its first liquefied natural gas (LNG) plant in Sakhalin
Russia unveiled its first liquefied natural gas (LNG) plant in Sakhalin on Wednesday opening up new energy markets in the Asia-Pacific region.

The plant is designed to liquefy gas produced as part of the $20 billion Sakhalin-II oil and gas project off Russia's Pacific Coast. Some 9.6 million metric tons of LNG will be produced annually.

Companies from Japan, the United States and South Korea have already signed contracts with Russia to buy the bulk of the gas within the next 25 years. Japan, the world's largest LNG market, will buy about 65% of Sakhalin liquefied gas.

The ceremony was attended by Russian President Dmitry Medvedev, Japanese Prime Minister Taro Aso, British Prince Andrew, the Duke of York, Dutch Economics Minister Maria van der Hoeven and other guests from partner countries in the project.

"I am positive, the new plant will change our gas export opportunities," Medvedev said at the ceremony adding the project would also improve international energy cooperation.

Project operator Sakhalin Energy's CEO Ian Craig said: "Sakhalin has now firmly established its position on the global energy map. When the Sakhalin-II project is fully on stream, it will supply around 5% of the world's LNG and make a significant contribution to strengthening global energy security."

Craig said LNG exports would begin in March with the first shipments to go to Japan.

Aso said the project would allow Japan to diversify its imports. The energy-poor country imports almost all its oil from the Middle East.

"Sakhalin-II will account for 7.2% of Japan's LNG imports. Energy resources in such close proximity to Japan are a long-held dream," the premier said, adding the project would also help Tokyo build a "strategic relationship with Russia" in the Asia-Pacific region.

The Sakhalin II project includes the Piltun-Astokhskoye and Lunskoye oil and gas fields on Sakhalin Island's northeastern shelf, with recoverable reserves estimated at 150 million tons (1.1 billion bbl) of oil and 500 billion cubic meters of natural gas.

Tankers with a capacity of 18,000 to 145,000 cubic meters will be used to deliver LNG from the plant.

The minority partners in the project, Royal Dutch Shell, Mitsui and Mitsubishi, currently hold 27.5%, 12.5% and 10% stakes in the project respectively. Gazprom acquired a controlling stake (50% plus one share) in the project in December 2006.

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