Petronas signs LNG deal with Tohoku
Petronas signs LNG deal with Tohoku
KUALA LUMPUR (Reuters): A unit of Malaysia's state-owned oil firm Petroliam Nasional (Petronas) signed an agreement on Monday to sell 900,000 tons of liquefied natural gas a year to Japan's Tohoku Electric Power for 20 years.
The value of the deal would be US$4.2 billion at current market prices, said Petronas president and Malaysia LNG Tiga chairman Hassan Marican.
Malaysia LNG Tiga will start delivering LNG to Tohoku from 2005 and the gas will be shipped from Bintulu Port in the eastern state of Sarawak on Borneo island.
"The signing of this (agreement) marks the first LNG supply contract for Malaysia LNG Tiga," Hassan said.
Construction of Malaysia LNG Tiga, 60 percent owned by Petronas, started in 1999 and production is expected to begin by 2003, with an annual capacity of 3.4 million tons.
The plant is part of the country's LNG complex in Bintulu where two other production facilities re already operating.
Completion of Malaysia LNG Tiga will make the Bintulu complex the world's single largest LNG production facility with a capacity of about 23 million tons a year.
Royal Dutch/Shell group is the second largest shareholder of Malaysia LNG Tiga with a 15 percent stake while Nippon Mitsubishi Oil Corp owns a 10 percent stake.
Other shareholders are the Sarawak state government with a 10 percent stake and Diamond Gas Netherlands BV with five percent.
The agreement with Tohoku will boost the Japanese company's annual import of LNG from Malaysia to 1.4 million tons a year.
Tohoku, Japan's fourth largest electricity provider, currently buys 500,000 tons of LNG from Malaysia under a 20-year contract signed in 1996.
Tohoku's agreement to buy more LNG from Malaysia comes just as the closure of Exxon Mobil's gas fields in Indonesia's troubled Aceh province in March forces the company to look for alternative sources.
Besides Tohoku, Malaysia LNG Tiga is also in final stages of concluding sales contracts with three other parties.
The three buyers -- India's Metgas, a Japanese Gas Consortium made up of Tokyo Gas Co Ltd, Toho Gas Co Ltd and Osaka Gas Co Ltd, and Japan Petroleum Exploration Co -- had previously signed confirmation of intents to buy 2.6 million, 1.6 million and 500,000 tons of LNG respectively.
"We hope that during the course of this year, we would have signed most of the sales and purchase agreements," said Hassan.
Japan, the world's largest importer of LNG, currently gets 25 percent of its supply from Malaysia, Hassan said.