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.