Tokyo Gas signs LOI with Alaska Gasline for LNG

Tokyo Gas Company Ltd. said Tuesday it signed a letter of intent (LOI) with the state-owned Alaska Gasline Development Corp. (AGDC) for the purchase of liquefied natural gas, Reuters reported.

The deal follows China’s biggest state-owned oil company, Sinopec, one of the country’s top banks and its sovereign wealth fund agreeing last month to develop the $43 billion natural gas project in Alaska.

Alaska LNG is designed to carry natural gas from fields in the North Slope through an 800-mile pipeline to south central Alaska for in-state use, and to a liquefaction plant to produce up to 20 million metric tonnes of LNG annually for export.

Tokyo Gas, which purchases roughly 14 million tonnes of LNG a year, plans to talk with AGDC on details of the possible purchase of LNG, including volume and length, a company spokesman told Reuters, adding such an action reflects its efforts to widen its supply sources.

Asked whether Tokyo Gas plans to invest in the project, the spokesman told Reuters: “We don’t deny or confirm the possibility of such an investment. Nothing has been decided at the moment.”

Alaska created AGDC in 2010 to build the project to tap the North Slope’s gas reserves, where production is expected to average roughly 3.5 billion cubic feet per day, according to Alaska LNG’s website.

Originally, AGDC’s partners in the massive development were some of the world’s largest oil companies, including ExxonMobil, BP and ConocoPhillips.

But all the oil giants pulled out of the project due to low natural gas prices and the lack of definitive tax and royalty agreements in place.

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