Japan's Tokyo Gas said on Friday it has signed a deal with Royal Dutch Shel...
TOKYO/SINGAPORE - Japan’s Tokyo Gas said on Friday it has signed a deal with Royal Dutch Shell for the long-term supply of liquefied natural gas , partly using a coal-linked pricing formula in an unusual move for an Asian LNG buyer.
The companies signed a heads of agreement for Tokyo Gas to buy 500,000 tonnes a year of LNG for 10 years from April 2020. A pricing formula based on coal indexation will be used for part of the supply, the spokesman said, while the rest will be priced off conventional gas- and oil-linked indexes. Tokyo Gas did not give the volumes to be done under each pricing method.
Earlier this week, however, two U.S.-based firms announced alternative pricing options for contracts being signed for their new projects, ahead of an expected flood of supplies hitting global markets this year. As a gas and electricity provider trying to build its share in a competitive and liberalized power market, Tokyo Gas needs to compete with cheaper baseload coal-fired power, he said.
Shell will be supplying LNG to Tokyo Gas from its global LNG portfolio, rather than from specific LNG projects.
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