Conclusion of SPA for JERA-CPC Joint Purchase of LNG from the Mozambique LNG Project2019/05/13
JERA Co., Inc. (“JERA”) and CPC Corporation, Taiwan (“CPC”) have jointly signed a Sale and Purchase Agreement (“SPA”) with Mozambique LNG1 Company Pte. Ltd., the jointly owned sales entity of the Mozambique Area 1 coventurers, to procure LNG produced from the Mozambique Area 1 Project.
This project treats, liquefies, and ships natural gas produced off the coast of Mozambique Area 1 at a plant to be constructed in the northeastern part of the country. JERA and CPC will jointly purchase 1.6 million tonnes of LNG per year for the base term of 17 years from the commercial start date.
This is the first co-purchase with overseas partner on a long-term basis for JERA and CPC. Through this SPA, JERA and CPC may exchange LNG flexibly depending on each other's supply and demand balance.
The destination clause in this SPA is in line with the Survey on LNG Trades report released by the Japan Fair Trade Commission in June 2017.
A European gas price index is used as part of the contract price formula for this SPA. By utilizing the geographical advantage of this project, JERA and CPC believe they can respond appropriately to uncertainties in the domestic LNG supply and demand by redirecting the destination from Asia and Europe.
JERA considers this project enables JERA to expand opportunities for optimizing its LNG portfolio. JERA will continue to maximize its enterprise value and its ability to respond flexibly to changes in the business environment by building an appropriate LNG portfolio and optimizing its operations.
CPC remarks that this joint purchase represents a cross-boundary LNG alliance in Asia Pacific. For decades, CPC has had a close partnership with Japanese and Korean LNG importers on cooperative basis. This joint purchase helps CPC to further achieve the flexibility of operation in dealing with the growing uncertainty of domestic gas demand in order to ensure the stability of supply into Taiwan’s market.
Outline of SPA
Seller: Mozambique LNG1 Company Pte. Ltd.
Buyer: JERA Co., Inc. and CPC Corporation, Taiwan
Contract period: 17 years (base term)
Contract volume: 1.6 million tonnes per year
Delivery mode: DES
About JERA Co., Inc.
JERA is an energy company with global reach that has strength in the entire energy supply chain, from participation in LNG and other fuel resource projects and fuel procurement, through fuel transportation to power generation. Established in 2015, JERA is an equal joint venture of two major Japanese electric companies, TEPCO Fuel & Power Incorporated and Chubu Electric Power Company. JERA’s mission is to supply power and energy on a globally competitive basis, by effectively developing and managing its portfolio of energy chain assets and continuously optimizing its business.
About CPC Corporation, Taiwan
CPC Corporation, Taiwan is Taiwan’s state-owned oil and gas company, which was founded on June 1, 1946 with a mandate to lead the country’s energy sector. As an enterprise in state ownership, it is responsible not only for returning profit to the government but also for supplying sufficient energy to the domestic market. CPC’s business areas include oil & gas exploration and production, refining, petrochemicals, lubricants, solvents and chemicals; it is also Taiwan’s sole importer and supplier of natural gas.
About Mozambique LNG Area 1 Project
Anadarko Moçambique Área 1, Lda, a wholly owned subsidiary of Anadarko Petroleum Corporation, operates Offshore Area 1 with a 26.5-percent working interest. Co-venturers include Mitsui E&P Mozambique Area1 Ltd. (20 percent), ENH Rovuma Área Um, S.A. (15 percent), ONGC Videsh Ltd. (10 percent), Beas Rovuma Energy Mozambique Limited (10 percent), BPRL Ventures Mozambique B.V. (10 percent), and PTTEP Mozambique Area 1 Limited (8.5 percent)”.