Tokyo Gas agreed with Shell for the long-term supply of liquefied natural gas (LNG) with a first-time pricing formula based on coal indexation.
The two companies signed a heads of agreement for Tokyo Gas to buy 500,000 tons per annum of LNG for 10 years starting April 2020.
Under the agreement, Shell supplies LNG to Tokyo Gas from the Shell Group’s global LNG portfolio, rather than from specific LNG projects. The HOA will allow Tokyo Gas to secure a long-term, stable and competitive supply of LNG.
Tokyo Gas’s managing executive officer said: “With our long-term relationship and joint consideration, we were able to achieve an innovative agreement that would enhance further diversification of price indexation pursued by Tokyo Gas. We will continue to tackle new challenges that would contribute to the development of LNG industry.”
Steve Hill, Shell’s executive vice president said: “Our broad portfolio enables us to provide reliable LNG supply as well as tailored solutions including flexible contract terms under a variety of pricing indices.”