JERA, Japan’s largest power generation company, has signed 20-year offtake agreements to procure up to 5.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) from the US.
The company has entered into sales and purchase agreements (SPAs) with NextDecade and Commonwealth LNG, as well as a heads of agreement with Sempra Infrastructure and Cheniere Marketing.
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These agreements, announced at the US Department of Energy headquarters, align with JERA’s strategy to diversify and strengthen its LNG procurement portfolio, enhancing energy security for Japan and Asia.
The agreements also help to mitigate price instability, respond to demand fluctuations and harness JERA Global Market’s trading expertise. These efforts are crucial for ensuring a stable and affordable energy supply and supporting Asia’s broader energy transition.
Under these agreements, JERA will secure LNG with competitive pricing, flexible contract terms and no destination restrictions, allowing for optimised shipping and market responsiveness.
Commonwealth LNG will supply 1mtpa of LNG from its 9.5mtpa facility under development in Louisiana. The first LNG from the facility is expected in 2029.
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By GlobalDataThe SPA with Commonwealth LNG will become effective upon meeting customary conditions.
Sempra Infrastructure will supply 1.5mtpa from the Port Arthur LNG Phase 2 project in Texas.
JERA will obtain 2mtpa of LNG from NextDecade’s Train 5 at the Rio Grande LNG facility, and up to 1mtpa from Cheniere Marketing’s Corpus Christi LNG and Sabine Pass LNG facilities in Texas and Louisiana, respectively.
JERA global CEO and chair Yukio Kani said: “As Japan’s largest power provider, JERA plays a central role in securing the country’s energy future. After more than 15 months of strategic evaluation and commercial engagement, we are pleased to finalise the agreements with US suppliers, which offer unique flexibility and reliability – essential elements in our diversification strategy.
“These agreements strengthen Japan’s energy security, reaffirm the US’ leading role in the global LNG market, and support long-term sustainable economic development for both countries.”
The agreements build on JERA’s existing agreements in the US, which include contracts for 3.5mtpa from Freeport LNG and Cameron LNG, and a recent 1mtpa agreement with Venture Global CP2.
Furthermore, the agreements are expected to support US economic activity with an estimated contribution of around $200bn to US GDP and the sustenance of 50,000 jobs annually. This economic impact surpasses JERA’s current $6bn (Y863.25bn) equity investment in the US.
