EU Clears Jerat-EDF Tie-Up

The European Commission said August 24 it has cleared Jera Trading's acquisition of EDF's LNG trading and optimisation business.

It concluded that it would not raise competition concerns, because it does not result in any overlaps. The deal involves EDF's wholly-owned trading business EDF Trading (EDFT).

Early last month Jera, the world's largest LNG buyer formed in 2015 as a 50-50% venture of Tokyo Electric and Chubu Electric, and EDFT said they had signed binding agreements to form an LNG optimisation and trading joint venture involving Jera and EDFT's LNG optimisation and trading activities being merged into Jera Trading (Jerat), owned 66.67% by Jera and 33.33% by EDFT.

Last month too Jerat said it will be renamed 'Jera Global Markets' once the transaction is completed, expected early 2019. EDFT’s coal business has belonged to Jerat since April 4 2017. 

Context to the deal

Japan and the European Union have co-operated over the past seven years in counteracting the use of restrictive clauses in long-term LNG supply contracts, culminating in June 2017 with a decision by regulator Japan’s Fair Trade Commission to ban such clauses in new contracts and to heavily circumscribe them in existing long-term deals. Jera is a major beneficiary of this new Japanese policy.

Two weeks ago Jera slashed its offtake from Abu Dhabi-based Adnoc LNG, when it inked a three-year offtake agreement with it for just 0.5mn mt/yr over three years from April 2019, but made no mention of renewing an existing contract with the same supplier for 4.7mn mt/yr that is set to expire next year after 35 years. Other large long-term suppliers to Jera (including Qatargas and Malaysia LNG, with contracts lapsing between 2018 and 2021) face the risk of similar treatment. 

Large Jera contracts due to expire 2018-21

Source: 2018 GIIGNL annual report