TOKYO -- Russia granted a Japanese-U.S. consortium yesterday the right to explore what are believed to be huge reserves of oil and gas just off Sakhalin Island, in what may be one of the biggest and, for the Japanese, politically most important business deals since the dissolution of the Soviet Union.
The $8 billion to $10 billion project will be conducted by Mitsui Corp., a giant Japanese trading concern; Marathon Oil Co., which is owned by USX Corp., and McDermott International Inc., a leader in the construction of oil platforms.
Though estimates vary widely, Russia said that roughly 700 million barrels of oil and 14 trillion cubic feet of natural gas reserves lie off the coast of Sakhalin Island in the Sea of Okhotsk.
The 29,500-square-mile island, east of the coast of Siberian Russia between the Sea of Japan and the Sea of Okhotsk, is north of Hokkaido, Japan's northernmost island.
Energy analysts said the two deposits, known as Piltun Astohskoye and Lunskoye, represented one of the largest known natural-gas reserves. For Japan, the natural gas would be much more important to future energy supplies than the oil from the same field.
An oil field with 700 million barrels of recoverable reserves is big by any measure but by comparison is far smaller than the 10 billion barrels discovered more than 20 years ago in Alaska's Prudhoe Bay.
The deal's significance for Japan by far exceeds new supplies of oil and gas. Tokyo has steadfastly refused to offer significant amounts of aid to the former Soviet republics until the Northern Islands, now part of Russia, are returned to Japanese sovereignty. The four islands, part of the Kuril chain, were seized by the Soviet Union in the closing days of World War II.