Japan’s LNG trading giant Jera said it has established a new unit in Singapore as a strategic base to maximize the value of the company’s LNG portfolio.
Through Jera LNG Portfolio Strategy, Jera would strive to “maximize the value of its LNG portfolio while contributing to the development of a healthy LNG market and to the stable supply of affordable energy,” it said in a statement.
The joint venture of Tepco and Chubu Electric said in the statement that Jera LPS started operations on Friday.
To achieve a stable supply of affordable energy, Jera said it aims to maximize the value of its LNG portfolio by building an “optimal LNG portfolio that takes into account stability, economic efficiency, and flexibility.”
LNG market changed “drastically”
Jera said the LNG environment has changed “drastically” over the past 10 years as LNG use has expanded, with increased complexity due to more intense competition, diversification of contract terms and price indices, increased commoditization, improved spot market liquidity, and greater market price volatility.
In line with this trend, many global LNG players are moving into Singapore, the “emerging center of LNG trading in Asia where human resources and information gather,” the firm said.
As market complexity has increased, some terms and conditions in long-term LNG sales and purchase agreements (SPAs) that JERA concluded in the past are no longer in line with actual conditions for either party, according to Jera.
In addition, negotiating the revision of prices stipulated in long-term LNG SPAs requires the “latest knowledge of and expertise in the LNG market.”
To address these challenges, Jera has established the new unit in Singapore as a new company with expertise and experience in both LNG market analysis and the fields of commerce, law, and negotiation.
Jera LPS would be responsible for negotiating revisions to terms and conditions and prices in Jera’s existing long-term LNG SPAs, analyzing the LNG market based on the latest information, and formulating the company’s LNG portfolio strategy, it said.