Japan's Tepco turns to Sempra Cameron for LNG
BY BEN LEFEBVRE
TOKYO -- Tokyo Electric Power Company (Tepco) is nearing completion of a deal with Cameron LNG to import 800 Mtpa of LNG from the United States, starting in 2017. Tepco said the natural gas it buys from Cameron would be linked to the U.S. Henry Hub natural gas price benchmark.
Cameron, an affiliate of Sempra Energy, currently operates a $900 million LNG import terminal near the United States Gulf Coast in Hackberry, Louisiana. Cameron expects to finish converting the terminal to export up to 12 MMtpa of gas by the end of 2017.
The proposed 20-year deal between Tepco, and potential LNG supplier Cameron LNG, follows contracts Cheniere Energy. LNG has inked with Korea Gas and others. The interest is heightened by a steep reduction in their use of nuclear power in the wake of the Fukushima catastrophe. Tepco currently buys most of its LNG from Brunei, Malaysia and other countries.
Currently no infrastructure to liquefy and export natural gas exists in the lower 48 states of United States, but Cameron and many other companies are building or planning natural gas export terminals. But potential exporters must first clear regulatory hurdles, including obtaining government permission to export the gas to countries not in a free-trade agreement with the United States, a group that includes Japan. So far only Cheniere has received government approval to actually ship the gas to much of the world, and its terminal to export LNG out of Louisiana is scheduled to be ready in 2015.
Tepco said it would rely on firms Mitsui and Mitsubishi Co to each transport 400 Mtpa of contracted gas. The natural gas would come from various shale plays, Tepco said. Tepco imported about 24 MMt of LNG in 2011, nearly a quarter of the total brought into Japan, the company said. The company was seeking to buy another 1.2 MMtpa of natural gas but didn't say where it was looking.
Dow Jones Newswires