Japanese utility Tokyo Electric Power Company said Friday, September 12, it has signed its first portfolio long-term contract to buy up to 1.2 million mt/year of lean LNG from BP Singapore for 17 years starting April 2017.
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The contract uses Henry Hub-linked gas prices for indexation, which should help Tepco procure lean LNG at competitive prices, the company said.
"The agreement will enable Tepco's steady purchase of LNG through diversification since BPS will provide LNG from various supply areas," Tepco said in a statement.
Tepco in 2012 set a goal of raising its lean LNG purchases to 10 million mt/year within 10 years, to almost half the total volume of its annual LNG purchases.
This latest deal brings its current lean LNG contracted volumes to 2 million mt/year, Tepco said.
BP in 2013 signed an agreement to lift 4.4 million mt/year from train 2 of the Freeport LNG export project on the US Gulf Coast.
Volumes from the US terminal are expected to begin delivery in 2019.
BP Singapore, an affiliate of BP, has a sales and purchase agreement with Japan's Chubu Electric, signed in 2012, to supply around 8 million mt of LNG over 16 years on an ex-ship delivery basis.
Japan's Kansai Electric in 2012 signed a "key terms agreement" to buy around 500,000 mt/year of LNG from BP Singapore for 15 years from fiscal 2017-18 at Henry Hub-linked gas prices.
Lean LNG is predominantly methane with small quantities of ethane and has a very low High Heating Value.