Tepco, BP unit sign LNG SPA

Tokyo Electric Power Company (Tepco) and BP Singapore, a unit of BP, concluded a sale and purchase deal for liquefied natural gas.

Under the agreement, Tepco will purchase up to 1.20 million tons of LNG per year over 17 years from BP Singapore, starting in April 2017.

The agreement states that Tepco will receive LNG from BPS, supplied from multiple LNG sources which BP Group holds (portfolio contract), and is the first long term contract of its kind for Tepco.

The agreement will enable Tepco’s steady purchase of LNG through diversification since BPS will provide LNG from various supply areas. The supply features the inclusion of lean LNG, which has a lower heating value per unit volume than conventional LNG, of which Tepco intends to increase its share, and also the inclusion of gas link (Henry Hub link) for price indexation, which will contribute to Tepco’s aim of purchasing LNG at competitive price.

Tepco said it has reviewed multiple supply sources, including those of US origin, in its strategy towards the annual purchase of approximately 10 million tons of lean LNG (half the amount of LNG purchasing). With this agreement concluded with BPS, a total of approximately 2 million tons of lean LNG per year will be secured.

Press Release, September 12, 2014; Image: Tepco