Agreements secure Japan’s energy supply, affirm U.S. as a global LNG leader
On June 12, JERA Co. Inc., Japan’s largest power generation company and a global leader in providing cutting-edge solutions to the world’s energy issue, announced that it has finalized 20-year agreements to procure up to 5.5 million tonnes per year of liquefied natural gas (LNG) from the United States, according to a press release by the company.
Joining JERA officials at the announcement was United States Secretary of the Interior Doug Burgum, Energy Secretary Christopher Wright — who also serve as chair and vice chair of the National Energy Dominance Council, respectively — and Shigeo Yamada, ambassador of Japan to the United States.
The agreements, which were introduced publicly at the U.S. Department of Energy headquarters in Washington, D.C., advance JERA’s long-term strategy to build a diversified and resilient LNG procurement portfolio in support of stable, secure energy for Japan and Asia.
Through long-term offtake commitments, the agreements are expected to support economic activity that could contribute approximately $200 billion to the U.S. GDP and sustain 50,000 jobs annually, according to S&P Global analysis. The total value of these transactions also surpasses JERA’s cumulative equity investment in the U.S., which currently stands at $6 billion.
The agreements include Heads of Agreement (HOA) with Sempra Infrastructure and Cheniere Marketing LLC, to secure future LNG supply from the U.S., along with Sales and Purchase Agreements with NextDecade Corp. and Commonwealth LNG.
The non-binding HOA with Sempra for 1.5 million tonnes per annum (mtpa) of LNG is tied to the Port Arthur LNG Phase 2 development project in Jefferson County.
“We are pleased to collaborate with JERA, Japan’s largest power generation company and one of the world’s largest LNG buyers, as they continue to work with the United States to diversify their sources to help strengthen the resilience and dependability of their energy supply,” said Justin Bird, chief executive officer of Sempra Infrastructure.
The agreement with Cheniere is related to the Sabine Pass LNG facility in Louisiana and Corpus Christi LNG facility in Texas. The six-train Sabine Pass facility — in liquefaction mode since 2016 — currently has a 30 mtpa LNG production capacity, processing more than 4.7 billion cubic feet per day of natural gas into LNG, which is stored in five tanks.
As part of the Stage 5 expansion project, Cheniere proposes to boost this by adding two large-scale liquefaction trains, each with a nameplate capacity of approximately 7 mtpa and a maximum production capacity of approximately 8.43 mtpa.
Cheniere’s Corpus Christi Liquefaction facility has four fully operational trains with an aggregated nominal production capacity of around 16.5 mtpa of LNG.
The agreement with NextDecade entails 2 mtpa from Train 5 at the Rio Grande LNG project, for 20 years, was announced in late May. The deal is subject to a positive final investment decision being taken on Train 5.
The agreement with Commonwealth LNG encompasses the Japanese player’s purchase of 1 mtpa of LNG for 20 years from the 9.5 mtpa Commonwealth LNG liquefaction and export facility currently under development in Cameron, Louisiana.
U.S. LNG procured through these partnerships uniquely supports JERA’s strategic priorities by offering competitive pricing, flexible contract terms, and strong market fundamentals. All volume will be delivered under Free on Board terms with no destination restrictions, allowing JERA to optimize shipping routes and respond flexibly to evolving market conditions and LNG demand across the Asia-Pacific region.
The new agreements build upon and enhance JERA’s existing operations in the United States, which include offtake contracts totaling 3.5 mtpa from Freeport LNG in Texas and Cameron LNG in Louisiana.
JERA also entered into an approximately 1 mtpa LNG offtake agreement with Venture Global CP2 in Cameron Parish, Louisiana, in 2023.
JERA Global CEO and Chair Yukio Kani stated these agreements strengthen Japan’s energy security, reaffirm the U.S.’s leading role in the global LNG market, and support long-term sustainable economic development for both countries.”
“The agreements represent a true win–win and reflect a strong commercial partnership between the two long-standing allies,” said Kani. “We are grateful for the constructive and collaborative engagement of our industry partners and stakeholders in both Japan and the United States that made these agreements possible. We look forward to building on this momentum with partners and customers around the world.”
JERA is Japan’s largest power generation company focused on providing cutting-edge solutions to the world’s energy issues. Established in 2015, the company produces one-third of Japan’s electricity, and is one of the largest LNG buyers in the world.
In support of a responsible energy transition, JERA has committed to achieving net-zero CO2 emissions from its domestic and overseas businesses by 2050.
— Dannie Oliveaux | DannieOliveaux@TheExaminer.com
