Following the signing by Sumitomo Corporation of a precedent agreement with respect to the bi-directional liquefied natural gas processing services with Dominion Cove Point LNG, LP, the body implementing the Cove Point LNG Project in the State of Maryland, the United States, Sumitomo Corporation has started negotiation with Dominion to conclude a final terminal service agreement. In this context, Sumitomo Corporation and Tokyo Gas Co., Ltd. have agreed to jointly work as a team to negotiate with Dominion.
The Project is envisaged to build a new LNG liquefaction plant in the existing Cove Point LNG import terminal owned and operated by Dominion (in Maryland, the United States), enabling Dominion to provide natural gas liquefaction service for export in the form of LNG. This means tolling customers concluding TSA with Dominion will be able to liquefy natural gas procured by themselves in the United States through the relevant LNG liquefaction plant. Upon obtaining the approval from the U.S. Department of Energy to export LNG to Japan or other nations that have not yet ratified a free-trade agreement (FTA) and also the approval for plant construction from the authorities, in addition to other processes required including but not limited to the final investment decision on the Project, Dominion plans to commence construction of a new LNG liquefaction plant to start-up the Project operation by sometime in 2017.
Sumitomo Corporation and Tokyo Gas have so far conducted a comprehensive deliberation on potential cooperation regarding the natural gas business in the United States and the import of LNG to Japan. Following the conclusion of the PA between Sumitomo Corporation and Dominion, Sumitomo Corporation and Tokyo Gas have decided to work together as a team to negotiate the TSA with Dominion.
In addition, Sumitomo Corporation and Tokyo Gas contemplate that the natural gas liquefied for import to Japan should be procured from the Marcellus shale gas field, etc. where located adjacent to the Project and in which Sumitomo Corporation has an interest. If the Project is realized, it would be a LNG of its kind in the US derived from shale gas destine to Japan.
Sumitomo Corporation is the first Japanese company to participate in the development of a shale gas field in the United States and currently holds two interests, including one in the Marcellus shale gas field. In addition, Pacific Summit Energy LLC, a fully owned subsidiary, is engaged in the gas trading business in the United States. Therefore, if the Project is finally agreed, Sumitomo Corporation will be able to establish a natural gas and LNG value chain in the United States across natural gas upstream development, through distribution and liquefaction, to LNG export.
Tokyo Gas is seeking to increase its procurement of LNG from un-conventional natural gas resources across the globe in order to diversify its portfolio, and to expand its global LNG value chain with the aim of reducing the costs of raw materials pursuant to its “Challenge 2020 Vision.” If the Project is finally agreed, these goals will be realized.
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Fairstar Heavy Transport N.V. (FAIR) has signed a third contract with Chevron PTY LTD and the Kellogg Joint Venture – Gorgon.
Under the terms of the contract, the semi-submersible vessel FJELL will provide marine transportation of modules and other related equipment over a series of voyages commencing in the second half of 2012 for a period of ten months. Chevron Australia PTY LTD and the Kellogg Joint Venture – Gorgon have options to extend the contract for up to an additional nine months.
The Gorgon Project, operated by Chevron Australia PTY LTD, is a joint venture of Chevron (approximately 47 percent), ExxonMobil (25 percent) and Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (one percent) and Chubu Electric Power (0.417 percent).
‘The Kenai LNG Plant has played an important role in our company’s history for more than 40 years. But with current market conditions and the changes in natural gas supply, continued operation as an export facility is not economically viable at this time,’ said John Roper, a ConocoPhillips spokesman.
Marathon Oil is the co-owner of the plant, which for more than four decades has shipped LNG to Japan. The plant will no longer export gas starting this spring as the two companies were unable to renew their supply contracts with Tokyo Gas and Tokyo Electric (Tepco).
ConocoPhillips said it was considering importing liquefied natural gas to Alaska in the future.
The Kenai LNG Plant began operating in 1969, after the nearby North Cook Inlet gas field, which is operated from the Tyonek platform, was discovered in 1962. It remains the only LNG export plant of domestic production in North America. All LNG produced at the plant is sold via contracts with two Japanese utilities. The Kenai LNG plant also plays a key role in serving the natural gas needs of Southcentral Alaska by providing critical additional deliverability to the local market during peak demand and emergency situations.
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