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Bloomberg: Tohoku Electric to Double LNG Purchases From North West Shelf

By Angela Macdonald-Smith

March 16 (Bloomberg) — Tohoku Electric Power Co., Japan’s fourth-largest power utility, agreed to double the volume of liquefied natural gas it buys from Australia’s North West Shelf venture.

Tohoku Electric, based in Sendai City, agreed to increase its LNG purchases from the Perth-based venture by about 500,000 metric tons a year to about 1 million tons a year starting in 2010 for eight years, North West Shelf Australia LNG Pty., the venture’s marketing arm, said in an e-mailed statement.

The A$19 billion ($15 billion) North West Shelf venture, operated by Woodside Petroleum Ltd., is expanding production at its Karratha plant to meet rising demand for the fuel in North Asia. The venture is giving existing customers priority over new customers for the additional available volumes, Peter Cleary, the head of North West Shelf Australia LNG, said in January.

“Tohoku Electric became a major customer of the North West Shelf venture with a contract signed in 2003,” Cleary said in today’s statement. The new supply agreement includes a change in the delivery terms to include shipping, he said.

Tohoku Electric, which isn’t one of the North West Shelf venture’s original eight Japanese customers, provides power to the seven prefectures in the northern end of Honshu, supplying more than 12 million people.

Higher Prices

The venture earlier this month completed an agreement with the last of the venture’s original eight customers to extend 20- year purchase contracts. Prices under the new accords are 15-20 percent higher than under the original contracts, Woodside Chief Executive Officer Don Voelte said last month.

The venture’s A$2.4 billion expansion project to add a fifth production line, originally budgeted at A$2 billion, is due to start production in late 2008.

“These higher LNG prices should help alleviate the increased capital requirements which have surpassed the market’s (and our) expectations,” Merrill Lynch & Co. said in a March 12 report.

BP Plc, BHP Billiton Ltd., Chevron Corp., Woodside’s 34 percent shareholder Royal Dutch Shell Plc and a venture between Mitsui & Co. and Mitsubishi Corp. own stakes in the North West Shelf venture, Australia’s biggest LNG producer.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at [email protected] .

Last Updated: March 16, 2007 04:25 EDT and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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