Tokyo Gas to Purchase U.S. LPG

Tokyo Gas to Purchase U.S. LPG

Tokyo Gas concluded a Confirmation note of Agreement with Astomos Energy Corporation, stipulating the basic terms regarding the purchase of US LPG.

Based on this agreement, Tokyo Gas will receive total amount of approximately 400,000 tons of US LPG for 6 years from 2013.

This is the first time for Tokyo Gas to purchase LPG with the price indexed to US propane linked prices.

Tokyo Gas, which uses LPG as a portion of raw material of city gas, held discussions with Astomos about the procurement of US LPG, in order to reduce the raw material procurement cost as well as to realize stable procurement through the diversification of supply sources, and today reached a Confirmation note of Agreement with Astomos. Astomos purchases LPG from Enterprise Product Partners, which operates an LPG exporting terminal in Houston Texas, and a part of LPG shipped to Japan will be sold to Tokyo Gas.

Tokyo Gas’s procurement of LPG will be based on the existing contract between Astomos and Enterprise from 2013 till 2015, and the procurement between 2016 to 2018 will be based on the new contract concluded today between Astomos and Enterprise. Both procurements from Astomos are indexed to US propane linked price, which is different from CP price index for the Far East.

Especially after 2016, Tokyo Gas’s expectation is that by supporting Astomos to conclude a new purchasing contract as a main buyer of LPG to continue to purchase LPG at a price indexed to the different price index from CP, it will contribute to realizing a LPG pricing structure which more accurately reflect the global supply and demand.

LNG World News Staff, February 27, 2013