Japan’s JERA has signed binding agreements with EDF Trading (EDFT), a unit of EDF, to form an LNG optimization and trading joint venture.
As per the agreements, EDFT’s LNG optimization and trading activities will be merged into JERA Trading (JERAT).
Upon completion of the deal, JERA will have 66.67% stake in JERAT through its wholly-owned subsidiary JERA Trading International whereas EDFT will own the remaining 33.33% interest in JERAT.
JERA and EDFT will have joint responsibility and joint control in managing the new and expanded business.
EDFT said in a statement: “With demand for LNG in Japan becoming increasingly variable and difficult to predict and the ramp up in US LNG liquefaction, Europe has become a key balancing market for excess global LNG.
“As a result, JERA and EDFT believe that there is significant room for optimising LNG on a global basis, establishing a more liquid market, and, over time, developing a clear pricing signal for LNG in Asia.”
The new business is expected to bring important resources including risk management capabilities required to better respond to the uncertainties of LNG demand in Japan and Europe, the firm noted.
JERA president Yuji Kakimi said: “We look forward, through JERA Global Markets, to optimising our global LNG portfolio with more flexible LNG sources and associated shipping positions amid the uncertainties of LNG demand in Japan and global LNG market developments.”
Additionally, JERAT and EDFT plan to combine their LNG optimization and trading activities into JERAT, which will become the exclusive LNG optimizer for JERA and EDF.
EDFT CEO John Rittenhouse said: “LNG is an important fuel for EDF and this joint venture will combine EDFT’s wholesale market optimisation capabilities with JERA’s offtake volumes.
“This is another important step in our relationship with JERA, which started in 2005 and has significantly grown over the years. I look forward to building this new business with JERA in the rapidly developing LNG market.”
The transaction, which is subject to customary regulatory approvals, is planned to be completed by early 2019.
Employing nearly 300 people and offices in Japan, Singapore, the UK, the US and the Netherlands, JERAT is expected to become one of the largest utility-owned seaborne energy optimizers with operations spanning in Asia, the Pacific and the Atlantic Basins.