KEPCO Agrees to Buy LNG from BP

Kansai Electric Power Co. (KEPCO) has inked an agreement with BP to purchase 500 000 tons of LNG per year for 15 years, starting from 2017.

Rather than the price of crude oil, this agreement is based on the price index price of natural gas, the company said.

The price of the LNG delivered will be around 30 percent lower than that of currently purchased LNG, the utility said. The contract will be based on prices in North America, where shale gas development has lowered natural gas prices, Kyodo News said.

The long-term contract based on the North American natural gas price, which has not been common for Japanese importers, could potentially lead to lower costs for thermal power generation in Japan. Prices in Japanese power companies' LNG contracts are typically linked to crude oil prices.