TOKYO (Bloomberg) -- Tokyo Electric Power Co., Asia’s largest utility, and Osaka Gas Co. are among three Asian customers signed by Exxon Mobil Corp. to buy liquefied natural gas from its $12.5 billion venture in Papua New Guinea.

Miles Shaw, an Exxon spokesman in Port Moresby, confirmed by e-mail that Tokyo Electric is one of the customers and didn’t immediately answer an e-mail about Osaka Gas. The company in a statement earlier said it had reached “commercial terms” with three Asian buyers for 4.3 million metric tons of LNG a year. Tokyo Electric spokesman Masayuki Kishino and Osaka Gas spokesman Toru Kinukawa each confirmed the talks when reached by phone, declining to say how much LNG the utilities may buy.
The world LNG market is likely to face supply shortages around 2013 as new projects fail to keep pace with demand, according to Wood Mackenzie, a U.K. energy research and consulting company. China Petroleum & Chemical Corp., the nation’s second-biggest oil company, said last month it was in talks to buy 2 million tons a year of the fuel from the Exxon- led project.
“Japan should diversify its supply sources as demand for cleaner-burning natural gas is expected to grow,” Satoshi Waseda, a research director at Mitsubishi Research Institute Inc., said by phone from Tokyo on Monday. “With aggressive buying and strong demand from China and India, Japan could face difficulty renewing some contracts.”
Exxon and its five partners may approve Papua New Guinea’s largest investment before the end of this year, Oil Search Ltd., one of the holders, said in a statement on June 15. They will start construction in early 2010, according to the Port Moresby-based Oil Search.
-------------‘Milestone’ project
“This is a key milestone in the project’s schedule, with delivery of LNG to the market expected to commence in late 2013 or early 2014,” Ron Billings, vice president of LNG, Exxon Mobil Gas & Power Marketing Co., said in the statement.
Exxon, which owns 41.5 percent of the venture, has dropped 11 percent this year in New York trading. Oil Search, with a 34 percent stake, has gained 18 percent over the same period in Sydney trading. Oil Search shares closed 0.7 percent lower at A$5.48.
Shares of Tokyo Electric rose 0.6 percent to 2,500 yen in Japan trading, and Osaka Gas, Japan’s second-biggest distributor of the fuel, dropped 0.3 percent to 316 yen. The benchmark Topix index rose 0.4 percent.
Tokyo Electric imported 20.06 million tons of LNG in the year ended March 2009, with about one quarter coming from the United Arab Emirates, and Brunei and Malaysia each supplying around one-fifth, according to the utility.
A contract with Brunei for 4.03 million tons a year is set to expire at the end of March 2013, according to Tokyo Electric’s data.
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The Papua New Guinea venture plans to build a unit near Port Moresby to process gas from the South Pacific nation’s highlands. The project has enough resources to support a third production unit of 3.15 million tons a year that could come on stream by 2017, UBS AG said.
Exxon awarded a contract to a Clough Ltd.-led venture for early project work such as roads, bridges and camps for the project, Clough said on June 4.
LNG is natural gas chilled to liquid form for transportation by ships to destinations not connected by pipeline.