JERA, Japan’s biggest power generator, has agreed to new supply deals for U.S. liquefied natural gas (LNG) from four projects to diversify its global portfolio away from its reliance on Australia, it said on Thursday.
JERA plans to buy up to 5.5 million metric tons per annum (mtpa) of U.S. LNG under 20-year contracts, with deliveries starting around 2030. That total includes some previously reported deals as well as newly announced agreements.
The move illustrates Japan’s efforts to seek stable and flexible LNG supply to strengthen energy security and meet growing electricity demand driven by expanding data centres. The country is the world’s second-largest LNG importer after China.
Doug Burgum, the U.S. Interior secretary, said at an event at the Department of Energy headquarters in Washington that the agreements are about prosperity and peace. “When we can sell energy to our friends and allies, our great ally like Japan, so that they don’t have to buy it from our adversaries, that makes the world a more secure place.”
JERA, Japan’s biggest LNG buyer, has signed a nonbinding agreement known as a heads of agreement (HOA) with Sempra Infrastructure for 1.5 mtpa from its Port Arthur LNG phase 2 project and an HOA with Cheniere Marketing for up to 1 mtpa from Corpus Christi LNG and Sabine Pass LNG. The Japanese utility also signed a 20-year sales and purchase agreement (SPA) with U.S. LNG developer Commonwealth LNG for 1 mtpa from its Louisiana project. On Tuesday, sources familiar with the negotiations told Reuters about the deal, although both companies declined to comment at the time. The 5.5 mtpa figure also includes its deal announced on May 29 with NextDecade to buy 2 mtpa from its Rio Grande LNG project.
All four are 20-year, free-on-board contracts with no destination restrictions, although the Cheniere deal could go beyond 20 years, JERA said.
“We made these decisions because cost-competitive and flexible LNG is essential as we look towards the 2030s,” JERA’s global CEO and chair, Yukio Kani, told Reuters.
He added that LNG has become increasingly important amid rising power demand from data centres and the soaring costs of cleaner alternatives like hydrogen and ammonia.
“We were also aiming to secure contracts with the projects already under development and tied to the EPC (engineering, procurement, and construction) agreements before the recent surge in LNG project costs and interest rates,” he said. The announcement comes amid ongoing trade talks between Japan and the United States, though Kani stressed there was no government pressure behind the deals which he said were purely private-sector decisions.
“We are rebalancing towards the global supply mix,” he said, to reduce its weighting toward Australia.
After the new deals, the U.S. will supply nearly 30% of JERA’s LNG mix, up from 10% now. Oceania and Asia, including Australia, currently account for more than half.
JERA, jointly owned by Tokyo Electric Power and Chubu Electric Power, already buys U.S. supply from Freeport LNG and Cameron LNG. In 2023, it signed a 20-year contract to buy 1 mtpa from Venture Global’s CP2 project.
(Reporting by Yuka Obayashi, Katya Golubkova and Kentaro Okasaka, Timothy Gardner in Washington and Curtis Williams in Houston; Editing by Christian Schmollinger and Matthew Lewis)