Russian state-controlled gas monopoly Gazprom has set out plans to finance and build liquefied natural gas handling and regasification facilities on two of the Kuril Islands in the country’s Far East, despite significant on-site renewable energy options.

According to authorities on nearby Sakhalin Island, first supplies of LNG to the islands of Iturup and Kunashir are scheduled for as early as 2023, with gas to be sourced from the Gazprom-led Sakhalin 2 oil and gas offshore development.

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The Kuril Islands archipelago that the Soviet Union captured from Japan at the end of World War 2, has a population of just 20,000 people, with most employed in the fisheries industry.

The islands' energy needs have been predominantly met by diesel fuel for generators and coal for heating, from the continent.

Gazprom plans to build two small-scale liquefied natural gas handling and regasification facilities, with a site near the village of Kitovoye on Iturup already identified as the prime location for the first LNG import facility, according to Sakhalin authorities.

The location for the second facility on Kunashir has yet to be decided, with work on project design documentation due to begin next year.

Kunashir has the largest share of the islands' population with an estimated 12,000 residents, and a further 6000 people living on Iturup.

Despite operating an LNG plant in the port of Prigorodnoye on Sakhalin Island under the Sakhalin 2 project, Gazprom will also invest to build a separate small-scale liquefaction and loading facility on Sakhalin to serve the project, authorities said, citing their cooperation agreement with the gas giant.

The scheme will also involve using a shuttle carrier to deliver LNG to both islands and a fleet of trucks that will carry LNG or compressed natural gas to local customers.

Neither Gazprom nor the authorities has provided a rough estimate of the required investments for the project.

However, it has been publicly affirmed that the LNG solution will be a cheaper option for local customers against continued imports of diesel and coal.

Renewable solutions pushed aside

The agreement with Gazprom folows several years of attempts from authorities to boost interest from Russian and Japanese investors in wind and geothermal power solutions to help reduce the imports of fossil fuels.

The islands, which host several volcanoes, are understood to have significant geothermal capacity because of underground layers of pressured hot water at a temperature above 100 degrees Celsius.

According to local reports, Kunashir’s first geothermal power facility, known as Mendeleyevskaya, is currently working at 20% of its nameplate capacity of 7.4 megawatts, while another similar unit on Kunashir is still idle since an accident in 2013.

Several geothermal, wind and even solar projects have been announced for the Kuril Islands over the last several years before the LNG solution was decided upon.