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Chubu Electric Power Co. plans to increase its use of a type of LNG contract that allows buyers more flexible terms and competitive prices.

The Nagoya-based utility expects to get a quarter of its LNG through so-called portfolio contracts by the early 2020s, up from 15 percent now, Hiroki Sato, the general manager of the fuels department, said in an interview.

The nation’s second-biggest purchaser of liquefied natural gas is attempting to diversify its purchases amid rising supply from producers including Australia and Russia, and as North America is poised to become a major exporting region. Buyers benefit from the contracts because they offer cheaper, stable supplies from multiple sources while sellers can choose cargoes from among global assets to maximize profits, Sato said.

Chubu Electric agreed in May to buy about 720,000 metric tons of LNG annually for 20 years from Royal Dutch Shell..