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Economy

Japanese, Russian companies see summit as chance for deals

Partnerships to extend beyond energy to food, pharmaceuticals

TOKYO -- Japanese and Russian companies are preparing to take advantage of the opportunity presented by Thursday's meeting between Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe to team up in a variety of sectors.

Mitsui & Co. and Ros Agro will sign a memorandum of understanding on a capital and business tie-up. The Japanese trading house is expected to invest several billion yen in London-listed Ros Agro, whose portfolio includes grains, cooking oil and meat. The Russian farming conglomerate reported sales of $1.18 billion in fiscal 2015.

Mitsui has expanded its global grain operations and is the top shareholder in Japanese meat producer Starzen. The trading house aims to offer operational know-how and Japanese agricultural technology to Ros Agro to boost sales in Russia and elsewhere in Asia. Mitsui also hopes to exploit synergies with other Russian cooking oil and grain companies it holds interests in.

The trading house is also expected to spend 15 billion yen to 20 billion yen ($130 million to $174 million) for a roughly 10% stake in R-Pharm, which produces drugs under licenses from pharmaceutical companies in India and elsewhere. The partnership with Mitsui will let it handle a broader range of drugs and expand overseas sales channels.

Mitsui's moves are of a piece with the eight-point economic cooperation plan Abe offered to Moscow, which mentions "extending length of healthy living" and "promoting industrial diversification and enhancing productivity."

Economic cooperation between Japan and Russia had centered mainly on energy. With Russia racing to foster other sectors, partnerships in a broader array of fields are possible if the two sides remain on good terms.

But energy is unlikely to be neglected. JGC plans to sign a memorandum of understanding with the government of Sakhalin on a feasibility study for building a small miniature liquefied natural gas plant on the eastern part of the island. The facility would produce up to 12,000 tons of LNG a year, providing fuel for households and businesses to the west.

All of the gas Sakhalin produces now is exported, and gas pipelines are difficult to build in many areas. Liquefying gas for transport would provide an alternative to diesel and coal.

The government-backed Japan Oil, Gas and Metals National Corp. and Russia's Irkutsk Oil will launch a new oil and gas exploration project. The two companies have performed a geological survey and begun test production in the Irkutsk region and plan to expand into neighboring areas.

(Nikkei)

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