Japan's JERA plans on expanding US LNG purchases in order to diversify the energy supply

JERA, Japan's largest LNG buyer, is planning to increase its purchases from the United States in order to diversify their supply and meet the demand growth spurred on by data centres and AI.

U.S. president Donald Trump promised to unleash the U.S. industry of energy to boost production and threatened the EU if it did not purchase more gas. This could mean that JERA would have to compete against other buyers to get more U.S. natural gas.

Japan's largest utility, which handles between 30-35 millions metric tons of LNG per year, sources almost half of it from Asia Pacific, including Australia and Malaysia.

This is a very high exposure. "My plan is to rebalance this and make our LNG portfolio more diversified," Ryosuke tsugaru said on the sidelines at the World Economic Forum's annual meeting in Davos, Switzerland.

"My plan is increase our exposure to U.S. Energy projects." "We are currently buying 3.2 millions tons of long-term contracts in America, which is small compared to the total amount purchased," he said without revealing the increase expected.

JERA will monitor the sustainability of the LNG policies of the United States. The United States is the largest LNG exporter in the world, and in 2024, alone, it shipped 88,3 million tonnes.

Trump has ordered that the U.S. Energy Department resumes considering LNG export applications after the Biden administration frozen them.

Seeking Alternatives to Russia

Tsugaru stated that JERA welcomed Trump’s policies for accelerating oil and gas production, and the development of new LNG project. However, long-term sustainability was still key.

"The U.S. has become a major supplier of energy to the global marketplace." We hope that America will continue to be a reliable and competitive supplier of energy, he said.

JERA will also talk to Middle East suppliers "to create a geographically more balanced energy portfolio" by prioritizing supply reliability and affordability.

The Russian LNG supply to Japan is threatened by sanctions, and the future growth of Russian LNG has been curtailed. Japan must now find alternatives.

JERA has signed two contracts for the Sakhalin-2 Project in Russia. One contract is for 0.5 millions metric tonnes per year until 2026 and another for 1.5 million tons per year expiring 2029.

Tsugaru expressed his hope that the long-term partnership between Qatar and LNG, which dates back to 1990s, would continue to grow.

Qatar is struggling to reach new LNG agreements with Japan due to increased competition from the U.S.

"Qatar's commercial aspirations are their own." We have our own but we can leverage long-term partnerships. "I am hoping to continue and expand long-term LNG partnerships with Doha," said he.

Tsugaru stated that JERA is more optimistic about the natural gas and energy demand in Japan. This is due to the growing demand for stable electricity, which includes data centres and artificial intelligence.

When asked for his forecast for the market, he stated that JERA was "generally optimistic" about 2026-2029. He said it would be "kinda balanced" because some new LNG projects may be delayed. (Reporting and editing by Alexander Smith, Alex Richardson and Marwa Rashad)

(source: Reuters)