Anadarko Firms Up Japanese LNG Deal

Anadarko has firmed up a 15-year LNG supply deal with Japan's Tohoku Electric that it signed in a preliminary version ten months ago.

The US upstream company said October 15 it had executed the sale and purchase agreement (SPA) with Tohoku under which it will supply 0.28 million metric tons of LNG per year from Mozambique LNG, its joint venture project on which a final investment decision is due next year. Deliveries to Tohoku will start in the early 2020s, once the Anadarko-led Area 1 project starts exports.

Anadarko executive vice president for international, deepwater and exploration Mitch Ingram said: "This SPA further demonstrates the steady progress we continue to make toward our target of an affirmative final investment decision (FID) during the first half of 2019. It brings together one of Japan's most important LNG buyers and the Anadarko-operated Mozambique LNG project and affirms our belief that Mozambique LNG will be a cost-competitive, long-term, global LNG supplier."

Anadarko, the operator, and its partners discovered some 75 trillion cubic feet of recoverable natural gas resources offshore and look to build a 12,88mn mt/yr onshore LNG plant. The US firm has a 26.5% interest, while co-venturers include Mozambican state owned ENH 15%, Japan's Mitsui 20%, Indian trio ONGC Videsh 16%, Bharat PetroResources 10%, Oil India 4%, plus Thai upstream firm PTTEP 8.5%.

Tohoku Electric said October 15 it will become the first Japanese offtaker of Mozambican gas: "This will be our first long-term agreement to procure LNG from the African continent, which will enable us to further diversify our supply sources. In addition, we believe that the agreement will contribute to improving our procurement flexibility, stability, and economics by enabling us to adjust our procurement volume depending on our supply and demand."

But it is unlikely to be the only Japanese buyer: Tokyo Gas and the UK's Centrica jointly signed a non-binding agreement to buy 2.6mn mt/yr  long-term from the Anadarko-led Mozambique LNG in June. The latter had already signed up France's EDF as a firm offtaker of 1.2mn mt/yr over 15 years. A binding supply deal for 2.6mn mt/yr to Thai PTT is believed to be pending Thai government approval.