* MOF's Kaizuka denies Japan could be next Greece * Warns current favourable environment won't continue

By Rie Ishiguro

TOKYO, May 12 (Reuters) - Japan's Ministry of Finance intends to take advantage of the current low government bond yields to prolong the average maturity of its debt to reduce refunding risks, a senior ministry official said on Wednesday.

We plan to prolong the maturity of debt as much as possible this fiscal year, Masaaki Kaizuka, director of debt management for the ministry, said in a seminar.

Referring to worries about the size of Japan's debt, he said its problems were very different from those of Greece. Japan's debt is domestically financed based on huge savings in the corporate sector and by households, he said.

Japan's problems are different in terms of the quality of its debt. It is not logical to think Japan could be the next Greece.

He said the ministry was forced to rely more on short-term debt last year because of successive government stimulus measures. But this fiscal year it is putting more emphasis on the super-long sector.

We will be flexible about our bond issuance plan, as we were in the previous year, Kaizuka said.

The ministry is due to issue 144.3 trillion yen ($1,558 billion) in JGBs to institutional investors through regular auctions in the fiscal year to the end of next March, a 5 percent rise from last fiscal year's actual issuance.

Investors are worried about Japan's swelling outstanding debt, which rose to a record 882.92 trillion yen as the fiscal year ended in March, almost twice the size of the nation's gross domestic product.

Financial markets have been shaken by debt problems in the euro zone, prompting downgrades by ratings agencies. The agencies have also threatened to cut Japan's sovereign ratings if it fails to show a strong commitment to cutting debt in a mid-term fiscal plan expected next month.

Kaizuka denied that Japan faces similar problems to Greece, but added: We need to recognise that the environment will eventually change. There may come a time when we would need to rely more on foreign investors.

The ministry is trying to boost communications with overseas investors to rein in risk premiums on JGBs, he said. ($1=92.61 Yen) (Editing by Michael Watson)