(Add quotes from GAIL source, background)
TOKYO Jan 24 Japan's Chubu Electric Power Co
said on Friday it will sign a preliminary deal with
India's GAIL as soon as possible to buy liquefied
natural gas (LNG) together, the latest move by Asian buyers
looking to cut prices for the fuel.
Rising demand for LNG in Asia, already the top destination
for the fuel, has helped push its price to near-record levels
and now buyers such as India and Japan are trying to find ways
to cut their soaring gas import bills.
India, Japan and other Asian countries that together import
70 percent of the world's LNG met in December to discuss forming
a buyers' club to get a better deal from suppliers.
Asian prices LNG-AS are now more than four times the cost
of natural gas in the United States, where a boom in
shale oil and gas has sharply reduced prices.
Apart from joint purchases of LNG, Chubu and GAIL aim to
explore cooperation in other areas such as shipping, Chubu
President Akihisa Mizuno told reporters on Friday.
Japanese Prime Minister Shinzo Abe is set to visit India on
A GAIL executive who did not wish to be identified said his
firm is in talks with Japanese companies to buy LNG together but
"nothing has been firmed up yet".
"There is no memorandum of understanding contemplated at
this stage with Chubu," the source said.
India's oil secretary, Vivek Rae, said in December that
India and Japan were planning to float joint tenders for LNG
Last week, it emerged that Japan's Tokyo Electric Power Co
(Tepco) is proposing to rope in domestic and foreign
companies to procure jointly up to 40 million tonnes a year of
Tepco's proposal was outlined in a business revival plan
approved by Japan's government earlier this month.
Asian importers say they are charged an excessive premium
over other regions because of a practice of linking LNG
contracts to oil prices. They also want more flexibility in
contracts over ship destinations to free up the market.
The buyers from China, South Korea, Japan, India and Taiwan
were due to meet again sometime next month but the GAIL
executive said that may be delayed.
"It looks difficult to have a meeting of major LNG buyers in
February. We have not yet received the reports on demand," the
During Abe's visit, Japanese trader Mitsui & Co may
expand its partnership with Oil and Natural Gas Corp
to consider joint acquisitions of upstream oil and gas stakes
globally, an industry source in Japan said.
ONGC and Mitsui had signed a preliminary agreement to
consider jointly buying LNG in August 2012.
(Reporting by Osamu Tsukimori; Additional reporting by Nidhi
Verma in NEW DELHI; Editing by Dale Hudson)