Regional LNG: Toho Gas signs deal with Petronas for LNG purchase

By Romel S. Gurky

Japan?s Toho Gas Co., Ltd. said it has entered into a Heads of Agreement with Malaysia?s Petronas LNG Ltd. for a purchase of LNG by portfolio supply.

Toho Gas plans to take 7-9 cargoes of LNG per annum under a 10-year supply contract starting April 2017, it said.

?We accurately keep track of any change in the environment for procuring energy, and strive for LNG procurement diversification, including diversification of the price-index, supply sources and types of contracts to ensure a stable energy supply to customers at a competitive price,? the company said in a statement Tuesday.

Toho Gas said it was for the first time that the company entered into a Heads of Agreement for a purchase of LNG by portfolio supply with the objective of flexibility of quantity and diversification of the price-index. ?We will continue diversifying LNG procurement to ensure stable city gas supply to customers at a competitive price.?

Outline of the Agreement is as follows
(1) Parties Seller: Petronas LNG Ltd. (Wholly-owned subsidiary of Petronas). Buyer: Toho Gas Co., Ltd.
(2) Duration 10 years from April 2017
(3) Supply Sources Petronas LNG Portfolio (Petronas LNG Complex in Bintulu, Malaysia and other LNG which Petronas delivers)
(4) Price: Hybrid pricing combining linkages to both crude oil and Henry hub
(5) Delivery： Ex-Ship (Seller arranges LNG transportation to Buyer's receiving terminals)
(6) Change of Destination Feasible by prior agreement between the Parties
※Toho Gas plans to take 7 - 9 cargoes per annum
※Portfolio supply: A seller supplies a buyer with LNG from its multiple supply sources
※Henry hub price: price index of the U.S. natural gas market.

Editing by Reiner Simanjuntak