EDF Trading to Buy LNG from Japanese JV Jera
EDF Trading, a wholly-owned subsidiary of French power giant EDF, has signed an LNG sales and purchase agreement with Japanese LNG aggregator Jera, they said May 26.
The agreement covers the sale of LNG to EDFT for delivery to European LNG terminals for about two and a half years from June 2018. Over that period, EDFT is to take 1.5mn metric tons but it gave no details on which terminals the cargoes would go to. It is commissioning one at Dunkirk in northern France, with the first commissioning cargo due early July.
Jera, a joint venture between Tokyo Electric Power Co and Chubu Electric set up last year, said the price of LNG sold would be linked with European gas market price and the volume sold can be adjusted at Jera's discretion.
This enables Jera to secure the flexibility needed to balance LNG demand fluctuation and also expand the opportunity for LNG trading in the future, it said. Jera will continue to seek such activity for flexible LNG procurement, aiming to reduce the LNG price in Asia.
Deliveries to Europe will have the opposite effect if they take gas away from the Asia-Pacific region; although if Jera is overcontracted to buy cargoes as demand shrinks, this option gives it somewhere to dispose of some of the excess.
"This agreement broadens our relationship with Jera where we jointly operate a successful coal procurement and trading business in Singapore", said EDFT CEO John Rittenhouse. "LNG is an important fuel for the EDF Group and this is a natural extension of our activities with Jera," he said.
As of July 2016 Jera has contracted to buy 40mn mt/year of LNG and 20mn mt/yr of coal, with the annual amount of LNG falling by 2040 to somewhere between 30mn mt/r and 40mn mt/yr; and the amount of coal rising to perhaps as much as 30mn mt/yr, according to its programme of February 2016.
It was created to allow two companies to pool their buying power, mirroring Shell's takeover of BG, which created the world's largest seller of equity LNG untied to destinations.
William Powell