Reuters: Japan's Chubu plans to buy stake in U.S. shale gas field

Chubu Electric Power Co, the world's third-biggest liquefied natural gas (LNG) buyer, is seeking its first stake in a U.S. shale gas field as a hedge against planned purchases from the Freeport LNG project in Texas, the company said.

Japanese power companies are stepping up plans to buy cheap LNG from U.S. shale projects from as early as next year, in a bid to cut the cost of soaring LNG imports in the wake of a nuclear power shutdown following the Fukushima disaster.

Chubu has agreed to buy 2.2 million tonnes of LNG a year from Freeport from 2018, and buying an upstream stake would help hedge its fuel expenses by offsetting feedstock costs in the event of a rise in the Henry Hub U.S. domestic gas benchmark price. 

"Natural hedging would be the main purpose," Hiroki Sato, general manager of Chubu's fuels department and head of its trading business, said in an interview. The firm would look to hedge only part of its purchases, he added. MORE