Tokyo Electric Power Co., Japan’s biggest consumer of liquefied natural gas, plans to buy the fuel from the Cameron project in the U.S. through Mitsui & Co. and Mitsubishi Corp. to reduce its energy costs.
The company known as Tepco plans to buy at least 400,000 tons a year of LNG each from Mitsui and Mitsubishi at U.S. Henry Hub linked prices for 20 years from 2017, it said in a statement.
Japan paid 63,200 yen ($674) for a metric ton of LNG in November according to data from the country’s Ministry of Finance. That’s equivalent to $15.31 per million British thermal units, compared with $3.43 for benchmark gas futures at Henry Hub in Louisiana.
Tepco is close to securing another 1.2 million tons of LNG a year from other suppliers beside Cameron, Toshihiro Sano, the utility’s managing executive officer, told reporters in Tokyo today. He declined to identify them.
The utility has concluded the deal with Mitsui and is close to a similar agreement with Mitsubishi, it said. The Cameron LNG terminal will be built in Louisiana and is expected to produce the first LNG in mid-2017, Octavio Simoes, president of Sempra LNG, said in January.
Tepco’s fuel costs to run gas and other thermal plants will reach a record 2.81 trillion yen ($30 billion) this fiscal year as all of its nuclear reactors are offline because of the Fukushima atomic disaster in 2011. Projected prices for the liquefied fuel from North America are lower because of increased supplies of shale gas.