Tokyo Gas to Buy LNG from LNG Canada Project

Tokyo Gas October 10 announced it has signed an initial agreement with Mitsubishi Corporation subsidiary Diamond Gas International (DGI) for purchase of LNG from Shell-operated LNG Canada project.

“By signing this agreement, Tokyo Gas is contributing to the start-up of the very first large-scale LNG production project in Canada,” it said. Out of total initial volume of 14mn mt/yr, DGI will offtake 2.1mn mt/yr of LNG from the project, and Tokyo Gas will in turn buy 0.6mn mt/yr from DGI for the duration of 13 years starting 2026. The LNG will be delivered on an ex-ship basis with destination flexibility.

Last week Shell said it has taken the decision to build LNG Canada. As LNG Canada’s joint venture participants had already taken the final investment decision (FID), the Anglo-Dutch major said that construction will start immediately, with first LNG expected before the middle of the next decade. Other partners are Petronas 25%, PetroChina 15%, Japan’s Mitsubishi 15% and South Korean state Kogas 5%. 

“On top of the access to abundant natural gas in Canada, the proximity of the project to Japan, which allows the shipment to take only about 10 days, promises a stable long-term supply of LNG,” Tokyo Gas said.

Established in 2013, DGI is the trading unit of Mitsubishi Corporation. It is involved in marketing of LNG produced by projects in the US and Canada in which Mitsubishi Corporation has equities, new business development in emerging LNG markets, and LNG short-term trading.