Japanese power producer Jera has signed multiple long-term LNG supply agreements with US partners over the past two months, to procure up to 5.5mn t/yr of LNG supply from the US over 20 years, the firm announced on 12 June.
The agreements include a 2mn t/yr sales and purchase agreement (SPA) with US LNG firm NextDecade on 28 April, and a 1mn t/yr SPA with US developer Commonwealth LNG on 30 May. Jera has also signed non-binding interim agreements with Sempra Infrastructure — a subsidiary of US energy firm Sempra — for 1.5mn t/yr on 29 May, and with developer Cheniere for 1mn t/yr on 11 June.
The deals offer competitive pricing and flexible contract terms. All supply will be delivered on a fob basis priced to the US' Henry Hub, allowing Jera to optimise shipping routes and respond flexibly to domestic demand and market conditions, the company said.
If the four deals are considered as a single package of 5.5mn t/yr of supply, it is Jera's largest contract to date, senior managing executive officer Ryosuke Tsugaru said. The new agreements add to Jera's existing offtake contracts with the US, which include a combined 3.5mn t/yr of LNG from Texas' Freeport LNG and Louisiana's Cameron LNG, and approximately 1mn t/yr of LNG from developer Venture Global's CP2 project in Louisiana. US supplies could account for 30pc of Jera's long-term LNG portfolio in 2035, up from 10pc at present, a Jera spokesman told Argus.
But Jera does not intend to increase its planned LNG handling volume of no less than 35mn t/yr up to the April 2035-March 2036 fiscal year, as some of its existing contracts are set expired in the middle of the 2030-31 fiscal year, Tsugaru said.
The potential increase in Japan's US LNG procurement should help reduce the US' trade deficit with Japan, which could aid Tokyo's negotiations over import tariffs with the US administration. But Jera emphasised that neither Tokyo or Washington had requested or pressured it to sign the new supply contracts. The deals were Jera's decision to ensure stable supplies to Japan, Jera said.
The Japanese government could use the US' proposed 20mn t/yr Alaska LNG export project as part of its tariff negotiations, as Alaska's proximity to Japan and its ample resources make it a promising import source for the east Asian country. Jera is waiting for more details to be announced about the project before it makes a decision on whether to step into an offtake deal, Tsugaru said. Jera dose not plan to invest in the development of the project, he added.
Japan's LNG imports from the US rose by 15pc on the year to 6.34mn t in 2024.
