Russia's UES proposes Sakhalin power project

Anatoly Chubais, chief executive of Russian utility Unified Energy System (UES), disclosed plans for a $9.6 billion project to supply electricity to Japan from Sakhalin Island, Russian news agencies are reporting.


TOKYO�Anatoly Chubais, chief executive of Russian utility Unified Energy System (UES), disclosed plans for a $9.6 billion project to supply electricity to Japan from Sakhalin Island, Russian news agencies are reporting.

Prime Tass news agency quoted Chubais as saying Japan has expressed great interest in UES's plan.

"I have already carried out discussions on this question with various high-ranking politicians, large corporations, and met with the Japanese prime minister and found an understanding," Chubais was quoted as saying.

The project involves construction of a 4,000 Mw steam-gas electric station on Sakhalin that will supply 25.5 billion kw-hr/year of electricity to Japan by 2012. Chubais said that one-fourth of that amount will be delivered to the grid on the northern Japanese island of Hokkaido and the rest to the Honshu grid.

The station will be powered by natural gas extracted at the fields in the Sakhalin I and Sakhalin II contract territories.

The project also involves construction of 1,400 km of transmission lines, including 400 km on land and a four-strand underwater cable to Hokkaido and Honshu. Substations will be built at the points the cable leaves the coast.

"If this project is implemented, linking the Sakhalin grid to the mainland using underwater cables... would not only increase the reliability of Sakhalin's grid severalfold, but would in future serve as the foundation for electricity supplies in the Far East," Chubais was quoted by Interfax news agency as saying.

The electricity will cost 2�/kw-hr to generate and 3�/kw-hr to transmit, according to figures in the preliminary project study, presented by the head of strategy and development at UES, Yuri Kucherov.

The electricity will sell on the Japanese market for 6-8�/kw-hr, he added. The line is expected to export $1.5 billion/year of electricity. The station will generate up to 28 billion/kw-hr/year, of which 25 billion kw-hr will be exported and the remainder consumed locally.

The plan also calls for the formation of a new stock company by 2002 to implement the project. According to Interfax, the initial capitalization will cover at least 25% of the overall project costs.

The remaining 75% will be borrowed. The loans will be at 2.2% interest during the construction phase, rising to 3.2% when operation commences, officials said. The loans will be repaid within 15 years.

A number of Japanese companies are said to be interested in the project, including Japan Petroleum Exploration Co., Itochu Corp., and Marubeni Corp. The Russian news agencies said the companies have been involved in the feasibility studies.

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