Regional LNG: Chubu Electric, KOGAS sign LNG swap deal

Chubu Electric Power Co. said Monday it and Korea Gas Corp. (KOGAS) have signed a contract to supply each other 60,000 tons of liquefied natural gas (LNG) when demand from the other's customers is expected to peak, Kyodo News reported.

The LNG cargoes are those, which they had agreed to import from Pertamina, Indonesia's state oil and gas company.

Chubu's demand peaks in the summer, when Japanese users consume electric power for air conditioning, while KOGAS' demand peaks in the winter when Koreans consume LNG for heating purposes, it said.

Since the volumes of LNG acquired by Chubu and KOGAS were set at the time they concluded their contracts with Pertamina, Chubu and KOGAS have decided to supply each other with LNG they have to spare after customer demand has been met, Chubu said.

Since LNG is less expensive than crude oil, the new transaction with KOGAS will likely help Chubu cut back on fuel costs for power generation, it said.

Chubu will have the 60,000-ton LNG cargo purchased by KOGAS delivered to a Japanese port on Aug. 16, while KOGAS will have the same volume delivered to a South Korean port around December, it said.

The swap deal is good for this year only. But Chubu said the two companies will consider concluding similar swap transactions whenever a need arises and both sides' interests coincide. (*)