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Sumitomo & Tokyo Gas in talks to export US shale gas

LNG Industry,

Sumitomo Corporation and Tokyo Gas Co., Ltd. have started negotiation with Dominion to conclude a final terminal service (TSA) agreement with Dominion to export shale derived LNG from the Cove Point LNG terminal.

The project is envisaged to build a new LNG liquefaction plant in the existing Cove Point LNG import terminal in Maryland owned and operated by Dominion enabling Dominion to provide natural gas liquefaction service for export in the form of LNG.

This means tolling customers concluding TSA with Dominion will be able to liquefy natural gas procured by themselves in the United States through the relevant LNG liquefaction plant.

Dominion plans to start construction on a new LNG liquefaction plant by sometime in 2017. The construction of a liquefaction terminal is dependent upon the company obtaining approval from the U.S. Department of Energy to export LNG to Japan or other nations that have not yet ratified a free-trade agreement and also the approval for plant construction from the authorities. The company will also need to make a final investment decision on the plans.

Sumitomo Corporation and Tokyo Gas contemplate that the natural gas liquefied for import to Japan should be procured from the Marcellus shale gas field, etc. where it is located in close proximity to the project and in which Sumitomo Corporation has an interest. Should the project come to fruitionit will be the first project of its kind to export US shale gas to Japan.

Sumitomo Corporation is the first Japanese company to participate in the development of a shale gas field in the United States and currently holds two interests, including one in the Marcellus shale gas field. Pacific Summit Energy LLC, a fully owned subsidiary, is also engaged in the gas trading business in the United States. Therefore, if the Project is finally agreed, Sumitomo Corporation will be able to establish a natural gas and LNG value chain in the United States across the whole value chain.

Adapted from press release by Peter Farrell.

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