Eric Watkins
Senior Correspondent
LOS ANGELES, Jan. 10 -- Tokyo Electric Power Co. (Tepco) will not renew long-term agreements to purchase LNG from projects in Alaska and Indonesia when they expire in 2009.
Reports said Tepco is seeking to obtain stable long-term supplies while diversifying its geographical risk. In 2005, Tepco purchased 30% of Japan's imports of LNG, with more than 6% of those supplies coming from Alaska and Indonesia.
Under existing contracts Tepco receives 920,000 tonnes of Alaska LNG from Phillips Alaska Natural Gas and Marathon Oil, along with an additional 130,000 tonnes of LNG from the Arun facility of Indonesia's state-run PT Pertamina.
Indonesia had trouble meeting its commitments to Japanese LNG buyers due to demand growth for domestic gas supplies. In Alaska, moreover, there are questions about long-term LNG prospects, given proposals for gas pipelines to feed growing US needs.
Tepco has had other uncertainties over the security of its supplies. In November 2004 the company signed a contract with Sakhalin Energy Investment, operator of the Sakhalin-2 project, to buy 1.5 million tonnes/year of LNG for 22 years from April 2007. Those supplies are now in question due to the sale of a 50% stake in the project to Russia's OAO Gazprom.
In an apparent effort to begin redressing the situation, Tepco last December concluded a heads of agreement on the purchase of 0.3 million tonnes/year of LNG from six sellers of Australia's North West Shelf LNG from April 2009 to March 2017.
The contract volume is about one fourth of the 1.18 million tonnes/year that Tepco buys from NWS LNG based on a 20-year agreement that will expire at the end of March 2009.
Contact Eric Watkins at [email protected].
