Russia signed a deal Friday with South Korea to ship liquefied natural gas (LNG) from its Far East to the east Asian nation for 20 years.

The agreement, signed by Sakhalin Energy, the company that develops the hydrocarbons deposits off the Sakhalin island, and the Korea Gas Corporation (Kogas), marks the first long-term energy supply deal between Russia and South Korea, Sakhalin Energy said in a press release.

Under the deal, Sakhalin Energy will ship 1.5 million tons of LNG annually to Kogas for 20 years from a LNG plant south of the Sakhalin island, which is more than halfway through in its construction and has a designed capacity of producing 9.6 million tons of LNG every year.

Sakhalin Energy has said it expects the plant to start shipping LNG to buyers in 2008.

The deal will help Kogas diversify its energy supply and turn the Sakhalin island into a new strategic source of natural gas for South Korea, the press release said.

"We look forward to building a lasting relationship with Kogas and justifying their confidence in the Sakhalin-2 project," Sakhalin Energy chief Ian Craig said in the press release.

The Sakhalin-2 project has reserves of some 150 million tons of oil and 500 billion cubic meters of gas.

Acting Kogas chief Lee Kyu-Sun said the location of Sakhalin and the competitive and flexible supply deal makes Sakhalin LNG "a natural choice" for Kogas.

Source: Xinhua