AUSTRALIAN energy giant Woodside Petroleum has signed an offtake deal with Japan’s Chubu Electric Power for the supply of about 1.5 million tonnes of liquefied natural gas.
The sales and purchase agreement will come into effect in April this year, which would see Woodside supply its LNG to one of Japan’s biggest electricity companies for three years.
The LNG slated for Chubu Electric would be primarily sourced from previously uncommitted volumes from its Pluto project off the north coast of Western Australia.
In a short statement, Woodside noted that the remaining terms of the agreement were commercial-in-confidence.
Woodside chief executive Peter Coleman said the agreement added to the company’s long-term relationships with major Japanese energy buyers.
“The agreement demonstrates the importance of Pluto LNG volumes in meeting growing regional demand for natural gas and also Woodside’s increasingly diverse LNG purchasing, sales and shipping arrangements,” Mr Coleman said.
Woodside is the operator of Pluto with a 90 per cent stake, while Tokyo Gas and Kansai Electric hold the remaining interest at 5% each.
The LNG offtake agreement comes as Japan, which is the world’s biggest consumer of natural gas, continues to re-build its energy industry three years after the Fukushima disaster, with all but a few of its nuclear reactors remaining offline.
WA Premier Colin Barnett said Japan’s long-term plan for natural gas before the tsunami was to increase natural gas consumption to about 30%. He said however there was a widely-held view that the nation would increasingly turn to LNG as a source of energy, acknowledging some industry commentators expect Japan to lift its natural gas usage to 60% of its overall energy consumption.
Locking in the new supply agreement also comes hot on the heels of Japanese investors pulling out of a deal to buy natural gas from Woodside’s Browse project.