Tokyo Gas signed Monday a sales and purchase agreement with UK gas giant BG Group to import 1.2 million mt/year of LNG from the Queensland Curtis LNG project near Gladstone in eastern Australia from 2015, marking the first CBM-based LNG import deal by any Japanese company, the largest Japanese city gas utility said.
Under the agreement, Tokyo Gas will import 1.2 million mt/year of coalbed methane-based LNG on an ex-ship basis for 20 years from 2015, the company said.
The 1.2 million mt/year LNG deal also includes provision for an unspecified volume of LNG from BG' global portfolio, which will bring stable, flexible and competitive supply of LNG for the utility, a Tokyo Gas spokesman said, declining to elaborate.
Tokyo Gas has said it was looking at unconventional gas projects as a means to diversify its supply sources.
In the past, Japanese buyers have been perceived by some industry observers to be reluctant to purchase LNG from the coalseam gas projects being planned in eastern Australia due to question marks over the quality of the gas.
But with a growing number of buyers voicing interest in these projects, it now seems as if that reluctance is dissipating.
"Tokyo Gas is now an important foundation customer for our groundbreaking Queensland Curtis LNG Project," BG Group's chief executive Frank Chapman said in a separate statement. "With these agreements we will bring a new source of natural gas to Japan -- the largest LNG market -- and advance the long and rewarding relationship between our companies."
As part of the SPA, Tokyo Gas also acquired a 1.25% equity interest in some of BG's tenements in the Surat Basin in Queensland, and will take a 2.5% stake in the second of QCLNG's two liquefaction trains under terms agreed as part of a heads of agreement signed in March 2010.
Tokyo Gas' investment in the QCLNG project is part of its Yen 150 billion ($1.82 billion) for overseas investments including upstream projects in its five-year investment plan to March 2014, the spokesman added.
The $15 billion QCLNG project is being led by BG subsidiary QGC and involves the development of thousands of wells in Queensland's Surat Basin, field facilities, a 540 km (335 mile) underground pipeline network and liquefaction facilities producing 8.5 million mt/year of LNG from two trains on Curtis Island in the port city of Gladstone. The project is scheduled to load its first shipment of LNG in 2014.
