TEPCO and Chubu Electric in Joint LNG Procurement
In a first such initiative in Japan, two of Japan’s major electric power companies, TEPCO and Chubu Electric, are holding a joint tender for the supply of LNG, inviting about 60 major LNG suppliers to bid. Bids are due by 19 December and a supplier will be chosen in January 2015.
TEPCO and Chubu decided on joint procurement in an attempt to secure lower LNG prices. LNG replaced nuclear power as Japan’s main energy source in the aftermath of the Great Eastern Japan Earthquake in 2011. Despite the efforts of the government and utilities to diversify energy sources, the increased demand for LNG pushed up global prices and contributed to Japan’s trade deficit since 2011.
The combined annual demand of TEPCO and Chubu is about 40 million tons. Taken together, they are the world’s biggest LNG buyer. They are looking to secure prices below $10 – about half the price in the aftermath of 2011 disaster.
This initiative is part of the companies’ plan to set up a 50-50 joint venture on fossil fuel procurement and thermal power generation by the end of FY2014.
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