Japan's JERA Co. Inc. is accommodating fluctuating demand for liquefied natural gas (LNG) in its home country through a sales and purchase agreement (SPA) to offload about 1.5 million tonnes of LNG to EDF Trading Ltd., a unit of Electricite de France.
The SPA is for a period of about 2.5 years beginning in June 2018. "The price of LNG sold will be linked with European gas market price and the volume sold can be adjusted by JERA's discretion," JERA said in an announcement Thursday.
"This enables JERA to secure the flexibility to correspond with the LNG demand fluctuation and also expand the opportunity for LNG trading business toward the future. JERA will continue to seek such activity for the flexible structure of the LNG procurement, aiming to reduce the LNG price in Asia."
Demand for LNG in Japan has declined at a time when the global LNG is in the midst of a supply glut.
Tokyo-based JERA is owned 50% by Tokyo Electric Power Co. and 50% by Chubu Electric. It is one of the world's largest buyers of LNG.
Earlier this year at industry conferences, JERA President Yuji Kakimi, said the global LNG sector should expect to see new buying and pricing trends emerging as the industry moves to one of greater supply volumes and greater choice in sourcing. The LNG industry will migrate away from long-term contracts and toward shorter and mid-term agreements, he said (see Daily GPI, March 1; Feb. 24).
Last March, Canada's Veresen Inc. signed a long-term capacity agreement with JERA for its proposed Jordan Cove LNG facility. The preliminary 20-year agreement includes JERA's purchase of 1.5 million tonnes per annum (mtpa) of liquefaction capacity, or a quarter of the 6 mtpa total capacity at the proposed export terminal in the international port of Coos Bay (see Daily GPI, March 22).