PETRONAS’ subsidiaries Malaysia LNG Sdn Bhd (MLNG) and MLNG Tiga Sdn Bhd today signed two separate Sale and Purchase Agreements (SPAs) valued at more than US$20 billion to supply liquefied natural gas (LNG) to The Tokyo Electric Power Company Inc and Tokyo Gas Company Ltd.
One of the SPAs was between MLNG and Tokyo Electric Power and Tokyo Gas, for the supply of up to 7.4 million tonnes per year of LNG to the two companies for 15 years beginning April this year. The agreement comes with an additional five-year option. At current prices, the contract is worth about US$20 billion for the 15-year duration.
The other SPA was signed between MLNG Tiga and Tokyo Electric Power to supply up to 540,000 tonnes of LNG to the Japanese company, also beginning next month. The duration of the contract is one year, which may be extended subject to the mutual agreement between the two parties.
The signing ceremonies for both agreements were held at the PETRONAS Twin Towers in Kuala Lumpur.
In 1983, Tokyo Electric Power and Tokyo Gas became the pioneer buyers of LNG from Malaysia when they signed a 7.4 million-tonne per year, 20-year contract with MLNG. This contract expires at the end of this month. The three parties negotiated for a new supply contract and signed a Memorandum of Agreement in March last year. The new agreement concluded today marks another milestone in the long-term relationship between MLNG and the two buyers and is a testimony to MLNG and Malaysia’s reputation as a stable, reliable and competitive LNG supplier.
Under the new contract, up to 5.6 million tonnes of LNG will be supplied annually on ex-ship basis by LNG tankers owned by Malaysia International Shipping Corporation Bhd (MISC), a subsidiary of PETRONAS. The balance of up to 1.8 million tonnes per annum of LNG will be transported by tankers owned by Tokyo Electric and Tokyo Gas.
Both MLNG and MISC have undertaken major upgrading and ship refurbishment to ensure the continuation of smooth and reliable supply of LNG to the buyers.
The one-year contract with Tokyo Electric is the fourth supply deal concluded by MLNG Tiga, and is the first short-term supply agreement signed with the buyer. Earlier contracts, all for 20-year durations, are for the supply of up to 900,000 tonnes of LNG per year to Tohoku Electric Power Co signed in April 2001; for the supply of up to 1.6 million tonnes of LNG per year to a consortium of Tokyo Gas, Toho Gas Co Ltd and Osaka Gas Co Ltd signed in February 2002; and for the supply of up to 480,000 tonnes of LNG per year to Japan Petroleum Exploration Co Ltd signed in April 2002.
Currently, MLNG Tiga is in various stages of discussions with several other potential buyers from traditional and non-traditional markets for its remaining production output.
The LNG for both contracts will be delivered from the PETRONAS Bintulu LNG Complex in Sarawak to the receiving terminals of Tokyo Electric and Tokyo Gas in Tokyo Bay, Japan.
Tokyo Electric is the biggest electricity provider in Japan, supplying power in the Tokyo metropolitan area and eight surrounding prefectures. Tokyo Electric buys about 16.6 million tonnes of LNG per year, or about 29 per cent of Japan’s total LNG import and 17 per cent of the world’s LNG supply.
Tokyo Gas is the largest city gas company in Japan, catering to the Tokyo metropolitan area and five surrounding prefectures. Tokyo Gas buys about 6.9 million tonnes of LNG per year, which is about 12 per cent of Japan’s total LNG import, or seven per cent of the world’s LNG supply.
Malaysia is currently the world’s third largest LNG supplier. The PETRONAS Bintulu LNG Complex houses the MLNG, MLNG Dua and MLNG Tiga plants. The MLNG Tiga plant is scheduled to commence operation by end of this month. The three plants’ combined capacity of about 23 million tonnes per year, together with ancillary facilities which include six LNG storage tanks and two loading jetties, make the Complex the world’s largest LNG production facility in a single location.
The integrated operations of the three plants, supported by the current fleet of 15 LNG tankers and the additional four vessels under construction, will enhance Malaysia’s position in term of flexibility and reliability.
Media Relations and Information Department