Tokyo Electric Power Co. (9501), Japan’s largest power utility, is in talks with BP Plc (BP/) to buy 500,000 metric tons a year of liquefied natural gas, according to two people with knowledge of the discussions.
Tepco, as the company is known, will pay for the fuel using a formula linked to both gas and oil prices, said the people, who asked not be identified because they aren’t authorized to speak to the media.
The company is negotiating with potential suppliers to buy as much as 1.2 million tons of LNG a year, said Yusuke Kunikage, a Tokyo-based spokesman for Tepco, declining to provide further details. Lynda Goh, a spokeswoman for BP in Singapore, declined to comment.
Tepco currently buys 20.56 million tons of LNG annually through term contracts, according to data compiled by Bloomberg.
Prices in long-term LNG purchase contracts, which usually run for more than 10 years, are typically linked to Brent crude, or the so-called Japan Crude Cocktail.
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