Tokyo Gas Eyes Shell LNG, Priced off Coal

Tokyo Gas has agreed heads of agreement with Shell Eastern Trading to buy 0.5mn mt/yr LNG from April 2020 to March 2030, partly indexed off coal, it said April 5. The two companies have been holding talks about a new kind of LNG agreement that could contribute to creating LNG demand, the Japanese utility said.

"As a result, for the first time among the two companies, Shell and Tokyo Gas have come up with an innovative pricing formula that is based on coal indexation and included this to the agreement," it said.

The Anglo-Dutch major's Singaporean subsidiary will supply LNG on a delivery ex-ship basis from its portfolio, rather than from specific LNG projects, allowing Tokyo Gas "to secure a long-term, stable and competitive supply of LNG."

Commenting on the HOA, Shell's executive vice-president Steve Hill said: “We are delighted to be partnering with Tokyo Gas and offering this innovative solution to meet their energy needs. Our broad portfolio enables us to provide reliable LNG supply as well as tailored solutions including flexible contract terms under a variety of pricing indices.”

Tokyo Gas CEO Kentaro Kimoto said: “With our long-term relationship and joint consideration, we were able to achieve an innovative agreement that would enhance further diversification of price indexation pursued by Tokyo Gas. We will continue to tackle new challenges that would contribute to the development of LNG industry. ”