Qatargas agrees to supply Japan with additional LNG for six years

Qatargas will supply an additional 200,000 tons per annum of liquefied natural gas (LNG) to Japan’s Chubu Electric Power Co Inc and Shizuoka Gas Co Ltd, the companies said on Wednesday.

The agreement, for six years starting in 2016, was announced at the World Petroleum Congress being held in Qatar. Qatar is the world’s top LNG exporter.

“We believe this agreement will enhance the further development of the relationship between Qatar and Japan,” Yuji Kakimi, chief executive of Chubu Energy Trading and general manager in charge of Chubu Electric's fuel department, told a news conference in Doha.

With many of Japan's nuclear power facilities still shut down after the March earthquake on the main island of Honshu, the country's power companies have had to boost their gas purchases to supply power and electricity to make up for the shortfall.

A Chubu Electric spokesman said Shizuoka Gas would take all of the allotment, adding that the agreement allows Chubu to negotiate terms if necessary. Qatargas currently supplies Chubu Electric with 10 million tons per annum.

Shizuoka Gas shares the same service area with Chubu Electric.

The announcement did not specify how much Chubu Electric and Shizuoka gas are paying for the additional supply. Chubu Electric's spokesman declined to comment on pricing.

“We look forward to signing more long-term contracts with Japan in the future,” said Qatargas Chief Executive Officer Khalid bin Khalifa Al-Thani.

Chubu Electric's Kakimi said Japan will need an additional three to four million tons per annum of gas in 2012.

This is far below an estimate given by Japan Oil, Gas and Metals National Corp last month, when a company official told an energy conference in Moscow that Japan's LNG demand will rise by 20 million tons in 2012 compared with 2010.

Japan imported more than 70 million tons of LNG in 2010 from Australia.