Japan's Jera Plans to Cut Long-Term LNG Contracts by 42%

Japan based Jera Co. plans to cut the amount of gas it buys under long-term contracts by 42 percent by 2030 from current levels, company's president told Reuters.

The company now buys 34.5 mtpa of LNG under contracts for 10 years or longer. By 2030, that will drop to about 20 million mtpa, President Yuji Kakimi said.

In February this year, Jera stated that its contract LNG volume in FY2030 is seen at 30 to 40 mtpa compared with 40 mtpa this year. Long term LNG offtake commitment is seen falling from 35 million tons in July 2016 to 15 mtpa in FY2030 as the company wants to optimize its LNG portfolio by procuring through combination of highly flexible short run and spot contracts and economically efficient and stable long term contracts.

Jera is 50:50 joint venture between Tokyo Electric Power (Tepco) and Chubu Electric Power to secure stable and competitively priced LNG.

Kakimi told Reuters Jera will take this step to prepare for the liberalization of the Japanese electric market that has clouded the outlook for LNG purchases by the country's utilities.

In its February statement, Jera also stated that it plans to almost double its LNG fleet by 2030.