JERA, Japan's LNG supplier, may look at Alaska, says exec

JERA, Japan’s largest power generator, could consider Alaska as a possible source of liquefied gas (LNG), according to an executive on Monday. Japanese officials will be heading to the United States for another round in tariff negotiations this week.

Alaska LNG, which is a $44 billion project that includes a pipeline, an LNG plant and other components, has been at the forefront of President Donald Trump’s agenda when dealing with Asian partners. He wants Japan, South Korea, and Taiwan to support this massive project.

Naohiro Makawa, an executive at JERA, said in a Monday briefing that "from the perspective of energy supply and security... we would consider Alaska as a promising supplier, among other options."

Trump has imposed 24% tariffs on Japan's exports to the U.S. but, as with most of his tariffs, these have been suspended until early July in order to give room for negotiation. The 10% universal rate and the 25% duty on automobiles, which are a majorstay of Japan's export heavy economy, remain in place.

Ryosei Acazawa, Japan's chief trade negotiator, is scheduled to meet with U.S. officials for another round of negotiations on tariffs later this week.

JERA is Japan's largest LNG buyer with an annual volume of around 35 million tons. This includes both domestic and international needs. Japan is the second largest LNG buyer in the world after China, with Australia being its biggest supplier.

Mitsubishi Corp, a Japanese trading company, may invest in Alaska LNG. However, any decision would require careful consideration, said its CEO earlier this month.

Sources familiar with the issue told us last week that Trump’s Energy Security Council plans to host an Alaska summit in early June. They hope Japan and South Korea announce their commitment to the Alaska LNG Project.

According to two Japanese sources, while Alaska is a viable option to diversify LNG supply sources due to its proximity to Japan and high construction costs, companies are still hesitant to make firm commitments because of the lack of project details and high construction costs.

Profits are halved

JERA announced Monday that its net profit had been halved. This was due in part to a decline in its renewable energy and power generation businesses overseas.

The company's net income for the fiscal year ended in March was 184 billion yen (about $1.3 billion), but it expects to see a rebound to 230 billion in the current financial year.

JERA is a joint venture of Tokyo Electric Power (TEP) and Chubu Electric Power (CEP). It has 30 overseas power generation projects spread across more than 10 different countries. The total capacity is around 13 gigawatts (GW), compared to 59 GW of domestic power generation.

It said that profits from its overseas business in power generation and renewable energies fell by 25.4 billion yen. They now stand at 8.3 billion. JERA also has renewable energy projects outside of Japan in the U.S.A., Belgium and Taiwan.

(source: Reuters)