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Japan's TEPCO to buy 800,000 tonnes of LNG from US

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(Globalpost/GlobalPost)

The operator of Japan's crippled Fukushima nuclear power station said Wednesday it plans to buy 800,000 tonnes of light liquefied natural gas (LNG) annually from the United States as it looks to cut its fuel bills.

Tokyo Electric Power (TEPCO) said it had agreed to buy 400,000 tonnes a year from Mitsui & Co trading house, and was in final talks with Mitsubishi Corp trading firm for the same amount. Both will come from the US Cameron liquefaction project to be operated in Louisiana.

The power company says it wants the LNG every year for two decades, starting 2017, and has already secured a further 1.2 million tonnes of light LNG, mainly from North America.

LNG is gas that is temporarily liquefied for easier storage and transportation. Light LNG mainly means shale gas produced in North America.

In Asia, the price for LNG is index-linked to oil, which means buyers tend to pay far more than those in North America, where price is determined on the basis of supply and demand.

"The company has secured annual two million tonnes of light LNG, including the 800,000 tonnes from the Cameron project," TEPCO said, adding the move would cut present LNG costs by about 30 percent.

"This is a move towards our plan to increase light LNG procurement to annual 10 million tonnes," about half of the firm's total LNG purchase, over the next decade, it said.

Resource-hungry Japan is the biggest LNG importer in the world, a situation intensified by the 2011 tsunami-sparked Fukushima nuclear accident, which increased public suspicion of atomic power and boosted demand for alternative fuels.

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http://www.globalpost.com/dispatch/news/afp/130206/japans-tepco-buy-800000-tonnes-lng-us