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Japan's Sumitomo to sell extra Cove Point LNG in spot market


Japan's Sumitomo Corporation will sell cargoes from US Cove Point LNGfacility if the extra volume reserved as a buffer is not needed, a companyexecutive said Monday.

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ST Cove Point, which is a joint venture between Japan's Sumitomo andTokyo Gas, has a 20-year service agreement to take 2.3 million tonnes peryear.

ST Cove Point will export 1.4 million mt/year to Tokyo Gas and 0.8million mt/year to Kansai Electric Power through Sumitomo's subsidiary PSE,leaving 100,000 mt/year in unsold volume.

"This extra volume of 100,000 mt/year is regarded as a buffer for TokyoGas and Kansai Electric to cope with seasonal fluctuations. But when thisbuffer is not needed, we will sell into the spot market," Hirofumi Nakamura,head of Sumitomo's LNG Business Development and Natural Gas & LNG BusinessDepartment, told during a press briefing.

The Cove Point started its commercial operations on April 9, and thefirst cargo for Tokyo Gas, which is expected to load after late April, willlikely deliver into Tokyo Gas Negishi terminal in a month's time, according toYoshihisa Yamada, general manager for Gas Resources Management Section and GasResources Dept. for Tokyo Gas.

Yamada said that while Henry Hub-linked LNG cargoes will help diversifyTokyo Gas' portfolio and alleviate changes in oil prices, the company willseek to optimize cargoes from the Cove Point project, which has no destinationclause.

US LNG will account for about 10% of Tokyo Gas LNG portfolio, Yamada said.

In 2016, Tokyo Gas signed a Memorandum of Understanding with UK companyCentrica, under which LNG procured by Tokyo Gas from the US would be swappedon a cargo unit basis with Pacific-sourced LNG belonging to Centrica.

--Eriko Amaha,

--Edited by Pankti Mehta,