OSAKA -- Kansai Electric Power will partner with GDF Suez in procurement and sales of liquefied natural gas, moving to establish a new revenue source ahead of the deregulation of retail energy markets in Japan.
The two companies are in the final stages of negotiations and plan to reach an agreement as early as Tuesday.
Under the plan, the Japanese utility will purchase cheaper North American shale gas and ship it to GDF Suez customers in South America and Europe. For its part, the French energy company will supply Middle Eastern and African gas to the utility's domestic facilities. Jointly operating LNG transport ships or obtaining gas concessions are also under consideration.
Kansai Electric currently sells excess LNG left over from domestic power generation in China and South Korea. Once its nuclear power plants resume operations, the company plans to develop LNG sales into a new global business.
The partnership would enable Kansai Electric to sell LNG in areas where it does not have a presence. It would also give the partners the flexibility to sell excess inventory to customers in need.
Forced to rely on fossil fuels to make up for idled nuclear power plants, Kansai Electric reported its fourth consecutive annual net loss in fiscal 2014. It hopes to ensure stable earnings through the tie-up, ahead of the liberalization of the gas and electricity markets.
GDF Suez was created through the 2008 merger of Gaz de France and Suez. With global oil, gas and water businesses, the company generated sales of 74.7 billion euros ($81 billion) in 2014.