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Tepco plans 800,000 tons of U.S. LNG

Kyodo

Tokyo Electric Power Co. said Wednesday it plans to procure 800,000 tons of liquefied natural gas annually from the United States from 2017 as part of efforts to cut heavy fuel costs for thermal power generation.

The LNG, including liquefied shale gas, will come from a project planned in Louisiana by a U.S. firm. Tepco said it has reached a contract for about 20 years with one of the sellers, Mitsui & Co., and is close to agreeing a similar accord with the other, Mitsubishi Corp.

With Tepco planning to secure an additional 1.2 million tons per year of relatively cheap LNG from multiple supply sources, the utility expects to cut fuel costs by ¥50 billion per year in total.

“We expect to be able to procure the 2 million tons about 30 percent cheaper than the current price level” of long-term contracts for LNG, Toshihiro Sano, managing executive officer of Tepco, said at a news conference.

The utility, which is in need of massive funds stemming from the Fukushima nuclear crisis, has also been facing ballooning fuel costs to make up for the halt of all its reactors due to the disaster.

Tepco plans to up procurement of so-called lean LNG with lower heating value, such as U.S.-produced shale gas, to 10 million tons per year.