TOKYO Feb 6 (Reuters) - Tokyo Electric Power Co, Japan's biggest liquefied natural gas (LNG) buyer, has secured its first supplies of the fuel based on prices at the Henry Hub delivery point in the United States, part of a shift in Asia away from oil-linked pricing.
The company, known as Tepco, said on Wednesday it signed a preliminary agreement with Mitsui & Co to secure at least 400,000 tonnes of LNG annually from the Cameron LNG project in the U.S. for 20 years from 2017.
Asia's LNG importers, the world's biggest, have been pushing their suppliers to agree to hub pricing and move away from so-called oil-indexing in the hope of securing cheaper supplies.
LNG is expensive in Asia, fed partly by Japan's need for fuel to run power stations after most of its nuclear plants were shut, following the disaster at Tepco's Fukushima Daiichi facility in March 2011.
It is nearly six times the cost of natural gas in the U.S., where a boom in shale oil and gas has driven down prices. U.S. gas prices do not take into account the cost of liquefying the gas and shipping it overseas.
Japanese importers also need the approval of the U.S. government to ship gas from shale projects there.
Tepco said it is also in final discussions with Mitsubishi Corp to secure at least 400,000 tonnes of LNG annually for the same period as the deal with Mitsui, also from the Cameron project, which is operated by Sempra Energy.
In addition, Tepco is in talks with several suppliers of LNG from unconventional natural gas fields to secure a maximum 1.2 million tonnes annually from 2015-2019. The firm declined to identify the suppliers.
Tepco said in November it plans to eventually import 10 million tonnes of LNG by tapping lean natural gas supplies, including U.S. shale gas. That is nearly half the company's imports of 24.1 million tonnes in the year to March 31, 2012.
Tepco will spend 40 billion yen ($428.3 million) on building and upgrading tanks and other equipment to accept LNG sourced from lean natural gas, Toshihiro Sano, a managing executive officer, said at a briefing on Wednesday.
Kansai Electric Power Co said in November it had signed a contract for supplies that would be linked to Henry Hub prices.