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Lloyds List: Tokyo Gas and Shell sign LNG ship pact

Majors to work together with the aim of improving utilisation of their gas fleets, writes Tony Gray, Lloyds List: Published: Apr 18, 2007

A pact between Tokyo Gas and Shell has been agreed in a quest to maximise efficiencies in their liquefied natural gas shipping operations.

The two parties have signed a so-called ‘master time charterparty’ with the aim of improving utilisation of their LNG carrier fleets.

It is the fourth such agreement signed by Tokyo Gas, Japan’s largest gas utility, in the past year.

The latest pact is between Tokyo LNG Tanker and Shell Eastern LNG, one of the oil major’s trading units.

Tokyo Gas said the agreement’s basic conditions would facilitate ‘the negotiation process when either company needs to procure shipping capacity from the other’ and would ‘contribute to better utilisation of the respective fleets’.

The two sides have previous mutual commercial experience, with Tokyo LNG Tanker having chartered vessels from Shell.

Tokyo LNG Tanker has also signed master time charterparties with Malaysia’s Petronas, Brunei LNG and Tokyo Electric Power with the aim of diversifying procurement and lowering the delivered cost of LNG.

The agreements cover chartering issues such as duties and responsibilities of charterers and owners and conditions of payment of hire rate and other costs. They are particularly designed to help meet spot and short-term shipping needs.

Tokyo Gas has sought greater involvement in the shipping component of the LNG chain in the last few years. The utility now owns’operates five LNG carriers and has majority interests in two newbuildings which will be delivered in the next two years.

By controlling vessels, Tokyo Gas aims to facilitate the procurement of LNG not only through long-term contracts, but also short-term and spot contracts, as well as other innovative methods. It is also targeting lower LNG import costs. Tokyo Gas is responsible for 15% of Japan’s LNG imports about 10m tonnes.

Shell has long been a major player in the LNG industry, through equity production, trading, import terminal capacity and shipping.

The oil major is involved in about 70 vessels through equity, management and staffing or third-party charters.

Shell Trading and Shipping Co manages a fleet of about 30 LNG carriers and has been involved in the specification, construction and commissioning of more than 30% of the world’s LNG fleet.

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