Mitsui & Co., Mitsubishi Corp. and the Royal Dutch/Shell Group of the Netherlands have agreed to invest $10 billion, or about 1.2 trillion yen, over five years in a joint oil and gas development project in Russia, company officials said Wednesday.

The agreement marks the full-scale start of the project dubbed Sakhalin 2. The firms have been conducting a feasibility study on the project for more than 10 years.

The partners expect Sakhalin Energy Investment Co., their joint venture set up in 1992, to begin producing liquefied natural gas at two offshore fields east of Sakhalin around 2007, the officials said.

Sakhalin Energy is expected to sign an LNG supply contract as early as Monday with Japan's major utilities to provide them with more than 3 million tons of LNG per year, they said.

Of the purchasers, Tokyo Electric Power Co. and Tokyo Gas Co., Japan's largest electricity and gas companies, will each purchase more than 1 million tons a year.

Tohoku Electric Power Co., Kyushu Electric Power Co. and Toho Gas Co. will also purchase LNG from Sakhalin Energy, according to the official.

The Sakhalin 2 project began producing crude oil in July 1999 on a trial basis. The venture will begin full-scale operations of the project once it has secured buyers.

The fields are estimated to have about 1.1 billion barrels of oil and 360 million tons of LNG-equivalent natural gas.

Sakhalin Energy will also try to sell LNG to South Korea and Taiwan, the officials said.

The Nihon Keizai Shimbun reported Wednesday the joint venture hopes to eventually supply as much as 10 percent of East Asian demand for LNG.