TOKYO Feb 6 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
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