Japan’s JERA strikes deal with Mitsubishi for LNG from Canada

12 April 2019, Week 14, Issue 553

Japan’s JERA said on April 09 that it has signed an agreement with Mitsubishi for gas from the planned LNG Canada project in British Columbia.

JERA, the world’s top buyer of LNG, said it had entered into a heads of agreement (HoA) with Diamond Gas International, a subsidiary of Mitsubishi, for the sale and purchase of the LNG. The deal covers the purchase of up to 16 cargoes per year of LNG over a period of roughly 15 years beginning in 2024. The 16 cargoes of LNG are equivalent to around 1.2 million tpy of LNG.

“This first procurement of LNG from Canada diversifies JERA’s supply portfolio and can be expected to contribute to stable and economical LNG procurement in the future,” the company said in a statement.

JERA noted that the destination clause in the agreement was in line with a report released by the Japan Fair Trade Commission in June 2017, the ‘Survey on LNG trades’. The commission also made a ruling, declaring destination restriction clauses to be anti-competitive, calling for destination flexibility in LNG contracts.

“JERA believes this will help it respond appropriately to LNG supply and demand uncertainty and expand opportunities for optimising its LNG portfolio,” it said.

JERA is a joint venture between Tokyo Electric Power Co. (TEPCO) and Chubu Electric Power. 

LNG Canada, which is expected to cost around C$40 billion (US$30 billion), was given the green light by operator Royal Dutch Shell and its partners in October 2018. The other partners in the project are all Asian companies – Petronas, PetroChina, Mitsubishi and Korea Gas (KOGAS) – and the scheme is targeting exports to Asia in particular.

LNG Canada is authorised to export up to 3.7 bcf (105 mcm) per day of gas over a period of 40 years. Other buyers from the project so far include Asian utilities such as Tokyo Gas, Toho Gas and KOGAS, as well as trading house Vitol.

 

Edited by

Anna Kachkova

Editor

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