Japanese power generation firm JERA has signed long-term agreements with US partners to secure up to 5.5 million tonnes per annum (MTPA) of liquefied natural gas (LNG) over the next two decades.
These agreements mark a significant expansion of JERA’s LNG supply strategy, aiming to ensure stable energy provision for Japan and other Asian markets.
The contracts involve sales and purchase agreements with NextDecade and Commonwealth LNG, in addition to heads of agreement with Sempra Infrastructure and Cheniere Marketing.
This collaboration is set to enhance JERA’s existing US operations, which already include agreements for 3.5 million tonnes of LNG per year from Freeport LNG and Cameron LNG. Earlier in 2023, JERA also established a contract for approximately 1MTPA with Venture Global CP2.
The terms of these agreements allow JERA to purchase LNG on a Free on Board basis, free from destination restrictions, enabling them to optimise shipping routes and adjust swiftly to changes in market demand within the Asia-Pacific region.
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.”
The arrangement supports JERA’s strategic goals by providing competitive pricing and flexible contract conditions, aligning with their broader aim of constructing a diverse and resilient energy procurement portfolio.
Commonwealth LNG’s involvement includes a plan for 4MTPA under long-term contracts, aiming for a final investment decision by Q3 2025 and commencing production in 2029.
Additionally, Sempra Infrastructure’s subsidiary has outlined a non-binding heads of agreement with JERA for the Port Arthur LNG Phase 2 development project in Texas, securing an annual LNG offtake of 1.5 million tonnes.
The agreements are expected to mitigate price volatility, acting as a safeguard against energy market fluctuations by ensuring consistent supply and pricing into the 2040s.
Furthermore, they enhance JERA’s capacity to respond to global shifts in energy demand driven by renewable energy adoption. The partnership will leverage JERA global markets’ expertise to optimise supply-demand matching, bolster cost competitiveness, and strengthen the stability of LNG supply across Asia.
