Speech by Alexey Miller at the Russian – Japanese Economic Forum

Esteemed Ladies and Gentlemen, Dear Colleagues, Friends

First of all, let me express my gratitude for the warm reception granted to us here in Japan.

Russia and Japan are undoubtedly reliable and long-term partners.

You are well aware that the first tanker with Russian liquefied natural gas has recently arrived in Japan. We believe it to be a landmark event, as it signifies the transfer of our cooperation in the energy sphere to a quality new level.

And it was not long ago that our relations with Japanese companies were limited mostly to Japanese deliveries of equipment, hardware and pipes to Russia.

Thus, Gazprom has been long and successfully using in Russia road construction machinery of the Komatsu Company.

The consortium comprising Mitsui, Sumitomo and Itochu organized big-diameter pipes deliveries for the construction of the unique Blue Stream gas pipeline. It has to be noted that the credit line provided from the Japanese Bank for International Cooperation and a Fuji-led banking consortium was a major component of the project.

However, time zips along and today Gazprom in the framework of its strategy to access new sales markets has for the first time come to the Japanese market with its produce. It became possible after the start-up of the biggest in the world integrated oil and gas project Sakhalin II, which is being implemented by Gazprom jointly with Shell and two Japanese companies – Mitsui and Mitsubishi.

Our Japanese colleagues make a considerable investment and technological contribution into the implementation of the mentioned project. In particular, they directly participated in the construction of the first LNG facility in Russia. Besides, three long-term chartered liquefied gas tankers were built at Japanese shipyards.

It is important to recall the agreement for the financing of the project signed with the Japanese Bank for International Cooperation last year for an amount over five billion US dollars.

In general, our well-coordinated work provided for a new source of energy, a new resource base for Asia and the Pacific Rim, including for Japan, which is the major consumer of Sakhalin LNG, as some 65% of the gas is delivered to four major electric power utilities and five gas companies of Japan by long-term contracts for 25 years. After the facility reaches full capacity the share of Sakhalin gas in Japanese LNG consumption will exceed 8%.

Sakhalin II project is an important component of the Program for the creation in East Siberia and the Far East of a unified gas production, transportation and distribution system, the implementation of which is coordinated by Gazprom upon instructions of the Russian government.

The second priority project implemented by Gazprom in the framework of the Eastern gas program is the Sakhalin – Khabarovsk – Vladivostok gas pipeline. Gazprom began to build it this year. The project not only provides good business possibilities for potential suppliers, but also creates favorable conditions for the development and expansion of natural gas deliveries from Russia to Asian and Pacific Rim countries, including Japan.

There is no doubt that the implementation of such large-scale investment infrastructure projects considerably contributes to an early overcoming of the crisis in global economy.

Speaking about enhanced economic relations between Gazprom and Japanese companies, I would like to stress the role of the Agency for Natural Resources and Energy of Japan. Our organizations created a successfully operating permanent joint committee. One of the practical results of its activities was the Agreement on Scientific and Technical Cooperation, which became a priority guideline of our joint work. Interaction with the Agency is consistently developing and we are sure to announce new important agreements in the near future.

As you know, gas resources in Russia's East are complicated in volume components. The specifics demand to create in the east of Russia a complex of gas chemical enterprises that will use the latest technologies for the output of products with a high added value.

In this connection, we see good prospects in the framework of the Eastern gas program for cooperation with Japanese partners in the creation of modern gas processing and gas chemical facilities, as well as in marketing the produce.

It is clear that the Eastern gas program, which is a mega-project of the state, will demand major numbers of equipment for the gas industry, including drilling platforms and drill ships, methane tankers, hardware and materials. In this context Japanese companies can develop production cooperation relations with Russian machine-builders, specifically in the east of Russia.

In general the availability of rich natural resources in the east of Russia and the unique experience of Gazprom in implementing large-scale energy projects on the one hand, and the world leadership of Japan in the design and introduction of advanced technologies, on the other hand, open excellent prospects for us in further expansion of large-scale partnership.

In conclusion I would like to recall an outstanding Japanese saying: You can tell a fruitful tree by its flowers.

We are convinced that already implemented joint projects – from Blue Stream to Sakhalin II – are only the first, but undoubtedly very beautiful flowers on the tree of long-term and fruitful cooperation between Gazprom and Japanese companies.

Thank you for attention!

Russian-Japanese Economic Forum, Tokyo, May 12, 2009