Japan’s Jera buying spot LNG for winter supply

Japan’s liquefied natural gas trading giant Jera is buying spot LNG volumes in order to secure additional winter supply.

According to a report by Platts, Takashi Noguchi, executive officer and head of the JERA optimization department’s strategy group, said the firm has purchased 2 million mt of spot LNG for the winter period from November to March 2022.

“We have additionally procured all of the 2 million mt basically via Jera Global Markets,” Noguchi told an online press briefing.

The joint venture of Tepco and Chubu Electric plans to make additional LNG procurements “appropriately” should there be changes in its supply-demand outlook beyond January, Platts reported.

Noguchi added that all Jera’s additional procurements were spot cargoes, including from North America.

This comes at a time when spot LNG prices broke several records.

Platts said last month that the JKM for November had reached $56.326/MMBtu, the highest level for the LNG benchmark for Asian spot LNG since Platts launched it in early 2009.

The price declined in the meantime but it continues to trade above $30/MMBtu.

Avoiding fuel constraints

Jera said in a statement on Wednesday the company has set several measures to avoid last winter’s fuel constraints and tightening of electricity supply-demand in Japan.

Last winter, factors such as a sharp increase in electricity demand caused by intermittent cold weather and a decline in LNG inventories that curbed power generation led to a tightening of electricity supply-demand in the country.

However, Japan’s LNG inventories, held by the country’s major power utilities, reached the highest level in five years on October 15, the Ministry of Economy, Trade and Industry said last month.

The ministry said then LNG stocks hit around 2.3 million tonnes as of October 15, a rise of 0.7 million tonnes from a year earlier.

In order to secure high levels of LNG inventories, Jera said it may divert some of its US LNG volumes bound for European LNG terminals to Japan when domestic demand increases.

“Leveraging Jeragm’s global business flow across Europe, the US, and Asia enables Jera to flexibly procure additional LNG,” the firm said.

Jera has recently agreed to buy a 25.7 percent stake in Freeport LNG Development from US-based Global Infrastructure Partners.

A unit of Jera, would pay about $2.5 billion to take the stake in the firm which operates the Freeport LNG export plant in Texas.

Jera already owns 25 percent of Freeport LNG Train 1 and purchases and transports 2.32 mtpa of LNG for use in Japan and other importing countries.

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