Japan's Chubu Electric taps US sources for LNG

Japan's Chubu Electric Power is intensifying its drive to secure cheap and stable supplies of liquefied natural gas from the United States.

On July 31, Chubu Electric signed a liquefaction deal with a subsidiary of Freeport LNG Development L.P., which runs an LNG terminal in Texas. Osaka Gas Co. is also party to the agreement.

Under the deal, Chubu Electric will receive 2.2 million tons of LNG per year, equivalent to around 20 percent of its annual procurement needs.

Under the deal, American exports of LNG to Japan are scheduled to commence in 2017.

Before shipments can begin, Chubu Electric must obtain authorization from the U.S. government.

Yuji Kakimi, Managing Executive Officer of Chubu Electric, stressed the importance of the Freeport LNG deal, describing it as "a new step" in efforts to enhance the nation's energy procurement program.

"We want to create a new chapter in the history" of Japan's energy industry, Kakimi said.

If domestic companies succeed in establishing a business model based on the procurement and liquefaction of gas in the U.S. for Japan, they may be able to seize the initiative from suppliers who have been mercilessly driving up prices.

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