TEPCO to buy LNG from BP

Japanese electric utility Tokyo Electric Power Company (TEPCO) has agreed to buy up to 1.2 million tonnes of liquefied natural gas (LNG) per year (mtpa) from BP for 17 years.

The agreement will commence in 2017 and BP will deliver LNG from its portfolio of LNG sources.

The deal supports BP’s upstream developments and the company’s supply arrangements from such sources as the Freeport LNG project.

BP said the agreement provides for Henry Hub pricing indexation, along with the LNG supply with low calorific content, and is consistent with TEPCO’s strategy to expand both its pricing indexation and supply sources.

BP integrated supply and trading chief executive Paul Reed said: "BP greatly appreciates the opportunity to work with TEPCO in implementing this innovative agreement.

"Furthermore, we look forward to working closely with TEPCO on future sales opportunities, as it develops its new business model."

BP is active in several major LNG-producing regions and in the main LNG markets.

The company is involved in LNG projects in Australia, UAE, Indonesia, Egypt, Trinidad and Angola.

BP has a liquefaction tolling agreement for more than 4.4 mtpa LNG capacity at the Freeport LNG Project in Texas, US.

A final investment decision on the project is expected to be made later in 2014.