Centrica, Tokyo Gas Eye Joint Moz LNG Purchase
Tokyo Gas and dominant UK energy retailer Centrica have jointly signed a non-binding heads of agreement (HoA) to buy LNG from the jointly-owned sales entity of the Mozambique Area 1 joint venture partners, they said June 15.
The deal envisages 2.6mn metric tons/yr delivered ex-ship from the Mozambique LNG Project from the start-up of production until the early 2040s. The supply agreement provides the project with key foundation customers which will facilitate the final investment decision by the Anadarko-operated project.
Tokyo Gas and Centrica signed a memorandum of understanding (MoU) in November 2016 to collaborate in their LNG activities. This co-purchase agreement is a significant step towards the goal set out in this MOU and further deepens the relationship between the two companies, they said. This ground-breaking joint procurement scheme between a UK and a Japan based company takes full advantage of Mozambique’s central location between Europe and Asia to assist both companies in proactively managing demand fluctuations across regions.
The deal represents the first long-term offtake agreement from Africa for both Tokyo Gas and Centrica in line with ongoing efforts to further diversify their respective portfolios of LNG sources. Centrica CEO Iain Conn said: "Like-minded leading natural gas suppliers in our respective home countries, we are delighted to strengthen our strategic partnership with Tokyo Gas and expand our flexible LNG portfolio through this agreement with Mozambique LNG. Centrica has established strong LNG capabilities over the past few years and this agreement signed today demonstrates further progress in this growth area of our business.”
His counterpart at Tokyo Gas, Takashi Uchida, said that he hoped the commitment will "contribute to the start-up of the Mozambique LNG Project. We are very happy that through this first ever joint procurement with Centrica that utilises the unique central location of Mozambique, we have created the foundation for flexible LNG transactions to occur between the European and Asian markets. I hope that through this innovative agreement, we can further diversify source and price index, which leads to enhancing our challenges of securing more competitive LNG.”
US independent Anadarko's executive vice president for international Mitch Ingram added: "Tokyo Gas and Centrica have a strong global reputation in the industry, and we are delighted they have made this commitment to the Mozambique LNG project. At 2.6mn mt/yr, this HOA represents a significant portion of the marketing off-take target we have set for Final Investment Decision."
The Anadarko-operated Mozambique LNG project will be the country's first onshore LNG development, initially consisting of two LNG trains with total nameplate capacity of 12.88mn mt/yr using gas from the Offshore Area 1. It has already signed up France's EDF as a firm offtaker of 1.2mn mt/yr over 15 years and a smaller deal with Japan's Tohuku Electric. A deal for 2.6mn mt/yr to Thai PTT is believed to be pending Thai government approval.