Japan’s Sumitomo to sell extra Cove Point LNG in spot market
Japan’s Sumitomo Corporation will sell cargoes from US Cove Point LNG facility if the extra volume reserved as a buffer is not needed, a company executive said Monday.
ST Cove Point, which is a joint venture between Japan’s Sumitomo and Tokyo Gas, has a 20-year service agreement to take 2.3 million tonnes per year.
ST Cove Point will export 1.4 million mt/year to Tokyo Gas and 0.8 million mt/year to Kansai Electric Power through Sumitomo’s subsidiary PSE, leaving 100,000 mt/year in unsold volume.
“This extra volume of 100,000 mt/year is regarded as a buffer for Tokyo Gas and Kansai Electric to cope with seasonal fluctuations. But when this buffer is not needed, we will sell into the spot market,” Hirofumi Nakamura, head of Sumitomo’s LNG Business Development and Natural Gas & LNG Business Department, told during a press briefing.
The Cove Point started its commercial operations on April 9, and the first cargo for Tokyo Gas, which is expected to load after late April, will likely deliver into Tokyo Gas Negishi terminal in a month’s time, according to Yoshihisa Yamada, general manager for Gas Resources Management Section and Gas Resources Dept. for Tokyo Gas.
Yamada said that while Henry Hub-linked LNG cargoes will help diversify Tokyo Gas’ portfolio and alleviate changes in oil prices, the company will seek to optimize cargoes from the Cove Point project, which has no destination clause.
US LNG will account for about 10% of Tokyo Gas LNG portfolio, Yamada said.
In 2016, Tokyo Gas signed a Memorandum of Understanding with UK company Centrica, under which LNG procured by Tokyo Gas from the US would be swapped on a cargo unit basis with Pacific-sourced LNG belonging to Centrica.