The Sakhalin-2 group, the biggest of Russia's few production-sharing projects with foreign investment, said the world of LNG was evolving daily, but it was still confident long-term deals for LNG from its plant could be signed before the end of 2002.

"Sakhalin still remains one of the best LNG projects for those consumers in terms of geography, flexibility and diversity of supplies," said a company spokesman.

Sakhalin will have lower shipping costs as it is situated only 1,785 kilometres from Tokyo compared with 12,000 kilometres that separates Japan's capital from Qatar's Ras Laffan or 6,800 kilometres from Australia's Withnell Bay.

The plant will cost about $2 billion and produce up to 9.6 million tons of LNG a year. Zolotaryova said the group wanted by the end of 2002 to find long-term consumers for a large part of the 4.8 million-ton-per-year output - the expected capacity of the plant's first section.

Sakhalin-2 already produces oil from an offshore platform, and the LNG plant will be only a part of its overall spending on the entire project of $11 billion.

This includes two more platforms, an onshore processing facility, an oil terminal and two pipelines, which will span almost the entire 1,000-kilometre length of Sakhalin.

The spokesman said Sakhalin-2 shareholders were not underestimating competition in the Asia-Pacific LNG markets. Existing rivals include resource-rich and low-cost Qatar, Oman, Malaysia and Australia.

Indonesia's planned Tangguh plant is seen as a major potential competitor to Sakhalin. The Asia-Pacific region is set to remain the most important LNG market in the world, consuming roughly 60 percent of global LNG production.

"There is a developing LNG market on the U.S. West Coast and Sakhalin is again one of the geographically closest projects to it," the spokesman said.