Japan's JERA Expands U.S. LNG Purchases for Energy Supply Diversification

Japan's largest power generation company, JERA, is planning to increase its purchases of liquefied natural gas (LNG) from the United States to diversify its energy supply portfolio. This strategic move aims to reduce the company's high exposure to the Asia Pacific region and enhance its supply reliability and affordability. Ryosuke Tsugaru, JERA's head of LNG division, revealed the company's intentions at the World Economic Forum annual meeting in Davos, Switzerland.

JERA currently handles between 30-35 million metric tons (mt) of LNG annually, with nearly half of this supply coming from the Asia Pacific region. To rebalance its LNG supply portfolio, JERA plans to increase its exposure to U.S. energy projects, which currently account for a small portion of its long-term contracts. The company is optimistic about the U.S.'s potential as a reliable and competitive source of LNG supply, despite the need to monitor the long-term sustainability of U.S. LNG policies.

In addition to increasing its U.S. LNG purchases, JERA is also exploring opportunities in the Middle East to further diversify its energy portfolio. The company is hopeful of continuing and growing its long-term LNG partnership with Qatar, which dates back to the 1990s. However, JERA is aware of the challenges in agreeing to new LNG deals with Qatar amid rising competition from the U.S. and other suppliers with more flexible contract terms.

JERA's expansion of U.S. LNG purchases aligns with its broader decarbonization goals, as part of its strategy to diversify its LNG supply and market positions while optimizing LNG flow at a global scale. This expansion supports the company's commitment to reducing CO2 emissions intensity by 20% as of 2030 and total CO2 emissions by 60% as of FY2035, ultimately aiming for zero CO2 emissions from its domestic and overseas operations by 2050.

LNG plays a crucial role in JERA's transition towards a low-carbon energy mix by serving as a bridge fuel that can help reduce emissions from coal and oil-fired power plants. By replacing these higher-emission fuels with LNG, JERA can significantly lower its greenhouse gas emissions while maintaining energy security and stability. Additionally, LNG can be used as a feedstock for the production of hydrogen and ammonia, which are key components in JERA's plans to develop a low-carbon value chain and achieve zero-emission thermal power generation.

In conclusion, JERA's expansion of U.S. LNG purchases is a strategic move that supports its broader decarbonization goals and enables the company to play a significant role in the transition towards a low-carbon energy mix. By leveraging LNG as a bridge fuel and a feedstock for hydrogen and ammonia production, JERA can effectively reduce its greenhouse gas emissions while maintaining energy security and stability.