January 23, 2015 / 12:15 PM / in 3 years

UPDATE 2-Tepco, Chubu expected to buy 6 LNG cargoes from Vitol, GDF Suez -traders

(Adds transaction value of cargo deals)

LONDON/MILAN, Jan 23 (Reuters) - Japan’s Tokyo Electric Power Co and Chubu Electric Power Co,, are expected to buy a total of six cargoes of liquefied natural gas (LNG) from Vitol and GDF Suez in their first joint tender, three traders said on Friday.

“They are waiting for the government to confirm,” one of the traders said.

Vitol and GDF Suez are expected to supply three cargoes each, the traders said.

This is the first time the Japanese utilities have jointly tendered for LNG, aiming to reduce procurement costs for two of the world’s biggest LNG buyers.

“It’s unusual in Japan for two big companies to approach jointly a tender, usually what they do is they don’t even tender, they just talk to their suppliers,” a trader said.

It is also unusual to hold a competitive tender because most LNG is supplied under long-term bilateral contracts between buyers and suppliers.

Selling prices were linked to the Asian crude oil benchmark, the Japanese Crude Cocktail, with a 13 percent indexation, plus a small premium of $0.20-$0.50 per million British thermal units (mmBtu) depending on the cargo and the seller, one trading source said.

Tepco, the world’s second-biggest LNG buyer after Korea Gas Corp, currently buys about 25 million tonnes every year.

Chubu Electric, the world’s third-biggest LNG buyer, takes in around 14 million tonnes a year. (Reporting by Sarah McFarlane and Oleg Vukmanovic, editing by Jason Neely)

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