This makes a boatload of sense. Japan has two baseload electricity fuels – coal and nukes. They used LNG in order to patch over Fukushimas aftermath but LNG has traditionally been peak fuel. The coal link allows the Japanese customers to hedge their price risk while solidifying LNG’s presence in this huge LNG market. And Shell – well if its not Shell that can deal with the price risk in its gargantuan LNG portfolio – who else can? This is smarter than the purported Asian LNG price hub.
Royal Dutch Shell Plc agreed to sell liquefied natural gas to a Japanese utility at prices that include a link to coal, the latest innovation in the booming LNG market where buyers are seeking to diversify risks.