Tokyo - Tokyo Electric Power Co. (TEPCO) today concluded a sale and
purchase agreement for LNG in Yuzhno-Sakhalinsk, Sakhalin in the Russian
Federation. TEPCO has been negotiating detailed conditions with the
seller, Sakhalin Energy Investment Company Ltd., for the purchase of
LNG from the Sakhalin II Project based on the Heads of Agreement (HoA)
concluded with that company on May 19, 2003.
The contract signed today reflects the need for TEPCO to address changes
in its operating environment such as progress in deregulation of the
electric power and gas markets. The terms and conditions of the contract,
including introduction of a buyer's volume option and making free on
board (FOB) the terms of delivery, provide great flexibility and
competitiveness. Furthermore, the Sakhalin II Project has an abundant
volume of resources and is geographically close to Japan. Thus,
procurement of LNG under this project is expected to contribute to
stability of supply and diversity of supply sources.
Outline of the Sale and Purchase Agreement
(1) Contracting Parties:Seller - Sakhalin Energy Investment Company Ltd.
Buyer - Tokyo Electric Power Co.
(2) Term :22 years from April 2007(*)
(3) Volume :1.5 million tons per year, plus buyer's volume
option
(4) Delivery terms :Free on board (TEPCO will arrange LNG tankers and
transportation of LNG)
(*) FY2007 and FY2008 are the start-up periods.
Appendix
Background Information
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