Petronas and Tohuku sign LNG long-term agreement
Petronas and Tohuku sign LNG long-term agreement
KUALA LUMPUR (Reuter): Malaysia's state oil company has signed
a long-term agreement to supply 500,000 tons of liquefied natural
gas annually to Japan's Tohoku Electric Power Co.
The contract is worth around US$300 million annually at
current oil prices, said Azizan Zainul Abidin, chairman of state-
owned Petronas, which will supply the LNG through its Malaysia
LNG Sdn Bhd subsidiary.
The first shipment is expected to be delivered in June 1996
from the country's LNG II plant, now being built in Bintulu, in
the East Malaysian state of Sarawak.
Petronas has ordered five tankers from France to ship gas for
LNG II. The first is to arrive in August.
Tohoku Power is one of five customers signed up for LNG II,
which will double the country's LNG capacity to 15.9 million
tons.
Tohoku's chairman Teruyuki Akema told reporters after the
signing ceremony that LNG has become a preferred source of fuel
for power plants because it is clean, relatively cheap, and a
stable source of energy. "In the eyes of the Japanese people, LNG
as an energy source is very acceptable."
The Japanese utility buys three million tons of LNG annually
from Indonesia, the world's biggest gas exporter, but wants more.
"We are building five new power stations. We need to pursue
LNG as a fuel to power these stations. We would like even more
gas from Malaysia," Akema said.
"Almost all of these customers have asked for more gas,"
Azizan told reporters. "But we have not been able to commit,
because we don't have the gas. But we will be glad to offer
Tohoku and all our customers more gas when we have LNG III."
Petronas has proposed to build a third plant in Bintulu,
scheduled to operate by 2000, and has identified Nippon Oil of
Japan and Occidental Petroleum Corp of the United States as its
potential partners.
The three are production sharing partners in a big gas field
off Sarawak that would supply the feedstock for LNG III.
China Petroleum Corp said in Taipei on Tuesday that it had
agreed to buy 2.25 million tons a year from the LNG II plant from
the second half of 1995.
Petronas officials identified LNG II's other customers as the
Korea Gas Co, Sendai City Gas of Japan and a consortium of other
Japanese gas companies.
LNG II -- a joint venture between Petronas, Mitsubishi Corp,
Royal Dutch Shell/Shell Group and the Sarawak state government --
will cost about $2.4 billion.
An international consortium of 37 banks signed a $1.187
billion nine-year loan agreement last month for the plant.
Another $1.2 billion will be provided by shareholders.