Chubu, CPC make LNG buying pact

Chubu, CPC make LNG buying pact

TOKYO (Nikkei): Chubu Electric Power Co. and Chinese Petroleum Corp. recently reached a mutual purchase agreement for liquefied natural gas, The Nihon Keizai Shimbun reported in its Thursday morning edition.

Under the arrangement, Chubu Electric agrees to a spot purchase of 240,000 metric tons of LNG that CPC plans to import this year from Indonesia, and CPC promises to buy the same amount from Chubu within five years.

CPC proposed the deal in June, hoping to sell off its excess gas. The Taiwan company has been slow to complete a gas pipeline currently under construction and to change fuel for thermal power plants near the line to LNG from petroleum.

Chubu Electric figured it could use more LNG since the unusually hot summer in Japan is pushing up power demand, while a water shortage has lowered the capacity of hydroelectric power plants.

Both firms have long-term contracts with Pertamina, the Indonesian state-run oil company. Chubu Electric currently imports 8.5 million tons of LNG per year, including 3.8 million tons from Indonesia. CPC imports 5.6 million tons, with 1.5 million tons coming from Indonesia.

The sources claim the deal is the world's first LNG swap.