Thursday, February 19, 2009

Russia-Japan inaugurate liquefied natural gas plant on Sakhalin Island on Wednesday

Yesterday, only a few days after agreeing to supply oil to China for 20 years in exchange for $25 billion in loan guarantees—Russia, opened it first liquefied natural plant meant to supply fuel to East-Asia.

Russia... the titan of natural gas has profited handsomely over the years from exporting energy to Europe.

However, tensions between the West and Russia have relatively high since last summer when Georgia and Russia entered a state of war (see map), with each side still debating who started the hostilities.

Map of the Caucasus Region

Much of the tension over Russia's influence in the Caucasus (the region Georgia is located) stems from the fact that Georgia is home to the only pipeline that transports energy to Western Europe that is not “Made in Russia.

After the slew of political and regional disputes with Europe, Russia is turning east for new partners. The move makes logical sense. The economies of East-Asia, for example Japan and South Korea, are powerful consumer states that coincidentally have virtually no natural resources.

New York Times journalists, Andrew E. Kramer describes the moves as being “prompted by both the promise of a marriage of Russian resources with Asian manufacturing, and Russia's financial desperation as interest from Western banks and investors dries up.” (Click here to access Kramer's full article from the NY Times website).

The natural gas plant, build on Sakhalin Island north of Japan greatly expands Russia's natural gas empire. Likewise, Asian resource starved countries like China, Japan and South Korea see this as an opportunity to invest cheaply in natural resources their economies will desperately need once the global economy recovers.

Click here AFP News video on this topic.
"Russia launches major gas project on Sakhalin"