OREANDA-NEWS. Japanese gas retailer Tokyo Gas and Taiwan's state-controlled oil firm CPC agreed to a co-operation deal today, in a move to drive down their LNG purchase costs.

The companies will begin discussions to work together on LNG purchases, supplying each other with the fuel and developing LNG-related engineering and technology.

The agreement strengthens their existing co-operation that has been aimed to erode the so-called Asian premium paid by LNG importers in Asia-Pacific since the March 2011 Fukushima nuclear disaster. The disaster prompted the shutdown of all Japan's nuclear reactors, creating additional demand for LNG to increase gas-fired power generation that in turn boosted import costs of the fuel.

The CPC deal is Tokyo Gas's fourth such co-operation agreement to realise more transport and market-appropriate Asia-Pacific LNG prices. It signed a deal with Indonesia's state-owned oil firm Pertamina in February this year, following an agreement with South Korea's state-controlled gas firm Kogas in September last year and with state-owned PetroVietnam in March 2012.

Tokyo Gas expects its LNG demand to increase to 13mn t in the 2019-20 fiscal year ending 31 March, up by 13pc from 11.5mn t in 2014-15. Its gas sales are forecast to grow by 15.4pc to 17.8bn m? over the period, in line with an expansion of gas pipelines.