Apr. 01, 2013
Sumitomo Corporation
Tokyo Gas Co., Ltd.

Sumitomo Corporation to enter into a Terminal Service Agreement And Tokyo Gas Co., Ltd. and Sumitomo Corporation to enter into Heads of Agreement for Sale and Purchase with Cove Point LNG

Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; President and CEO: Kuniharu Nakamura, hereinafter referred to as "Sumitomo") and Tokyo Gas Co., Ltd. (Head Office: Minato-ku, Tokyo; President: Tsuyoshi Okamoto, hereinafter referred to as "Tokyo Gas") jointly announced today, after extensive discussion since April 2012 with Dominion Cove Point LNG, LP (hereinafter referred to as "Dominion") the operator of the Cove Point LNG Project (hereinafter referred to as "Project") in Maryland (MD) USA, that a Terminal Service Agreement and a Heads of Agreement for Sale and Purchase with respect to the Project has been executed as follows.

Sumitomo, through Pacific Summit Energy LLC, a wholly owned subsidiary (hereinafter referred to as "PSE") has signed the Terminal Service Agreement with Dominion (hereinafter referred to as "TSA") for the liquefaction service to liquefy natural gas to LNG, the volume equivalent to approximately 2.3 mtpa, for export (hereinafter referred to as the "Project").
Tokyo Gas has established a wholly owned subsidiary, TG PLUS Co., Ltd. on February 28th, 2013 (hereinafter referred to as "TG PLUS") which has entered into a heads of agreement with Sumitomo for the sale and purchase of a volume of 1.4 mtpa of LNG (hereinafter referred to as "LNG HoA"). It is expected that Tokyo Gas will be entering into a LNG sale and purchase agreement with TG PLUS to import LNG to Japan.
Sumitomo and Tokyo Gas will further investigate the possibility of establishing a joint venture vehicle to implement the TSA which has been agreed between PSE and Dominion.

Sumitomo has succeeded in marketing the full amount of LNG (approximately 2.3mtpa) from the Project.

The Project will involve the construction of a new natural gas liquefaction facility at the existing Cove Point LNG Terminal currently in operation as a LNG receiving terminal, to export LNG produced from domestic natural gas (including shale gas). The contracted quantity for the liquefaction service of the Project is estimated to be approximately 4.6 mtpa. After several processes such as issuance of an authorization granted from the U.S. Department of Energy to export LNG to non-FTA countries, the Project will aim to start operation from 2017.

Sumitomo currently holds assets and is involved in three shale gas/tight oil operations in the USA, and also, through PSE, operates natural gas trading business in the USA. Sumitomo is planning to expand business in the fast growing unconventional energy industry with various approaches, and this Project matches with that strategy. Once the Project starts its operation, it will enable Sumitomo to be involved in all gas-related business segments across the value chain from shale gas upstream development, natural gas aggregation, transportation and liquefaction, to LNG export. Sumitomo will endeavor to realize this value chain to export LNG from the USA, the world's largest natural gas producer, to take part in achieving greater energy security for Japan.

Tokyo Gas, in its long-term corporate strategy "Challenge 2020 Vision," is exploring the diversification and expansion of raw materials procurement, including unconventional LNG, across the globe as well as expanding its overseas LNG value chain initiatives to reduce the cost of raw materials. LNG prices under the LNG HoA will be based upon a Henry Hub index linked formula, the first definitive long-term gas hub linked contract for Tokyo Gas. Tokyo Gas will endeavor to achieve a higher level of transparency of LNG pricing, and stability of supply of LNG, by leveraging its vast experience gained over the years, through procurement of LNG from a multitude of projects and through LNG terminal operations.

Customer : PSE
Operator :Dominion※
Term : Approximately 20 years from the Project start date
Quantity : Approximately 2,300,000 tons per annum
※Dominion: Dominion Resources, the parent company of the Dominion Cove Point LNG, is a private utility company who serves gas and power to nearly 6 million utility and retail energy customers across 15 states in Northeast、USA.