Tokyo (Platts)--18Sep2012/1127 am EDT/1527 GMT
Apache Canada is offering prospective Asian buyers oil-indexed pricing for gas from its proposed Kitimat LNG project in British Columbia, company president Tim Wall said Tuesday. "It's true. We are at the market place with oil-price index," Wall said in an interview with Platts in Tokyo. "It's a traditional contract essentially." When asked about Japanese LNG buyers' preference to import LNG from North America at Henry Hub gas prices, which were at 10-year lows earlier this year, Wall said: "Some do, some don't. It depends on buyers," declining to elaborate further on terms of pricing contracts. A number of Japanese companies have entered into projects for alternative supplies from North America in the hope of securing Henry Hub gas prices. Japan, after reporting its first annual trade deficit in 31 years in 2011, has been stepping up efforts to lower the cost of LNG imports. The country's LNG demand has soared since the March 2011 Fukushima nuclear disaster and Tokyo has been seeking additional supplies from major exporters such as Qatar. But Qatar has insisted on retaining oil-linked contracts for its LNG. LNG imports from the Middle East, which are linked to crude oil prices, are far more expensive than natural gas prices in the US, where Henry Hub prices earlier this year fell to 10-year lows and are currently well below oil-linked LNG prices. When asked about the status of concluding sales and purchase agreements for the Kitimat LNG project's output and final investment decision, targeted for the third quarter of 2012, Wall said: "It is definitely not going to be the third quarter this year." He declined to give the latest schedule for the FID because the company is still in talks with prospective buyers in Asia. "The talks with prospective buyers in Asia are ongoing," Wall said. "They have been for quite some time." While the company has not reached any heads of agreements with prospective buyers in Asia, Wall said the company has "pretty much completed" its front-end engineering and design work for the planned capacity of 5 million mt/year of LNG. Wall also said the Kitimat LNG project's first output would also depend on the actual timing of the FID. Earlier, Apache Canada said it expects to have first output from the Kitimat LNG project in mid-2016 based on its expectations to have SPAs and FID in place in the third quarter of 2012.--Staff, newsdesk@platts.com--Edited by Alisdair Bowles, alisdair_bowles@platts.comSimilar stories appear in LNG Daily. See more information at http://www.platts.com/Products/lngdaily