Largest LNG buyer becomes seller in oversupplied market
JERA Co. Inc., the LNG JV between Tokyo Electric Power Co. and Chubu Electric Power Co., plans to resell as much as 1.5 metric MMt of LNG between June 2018 and December 2020.
The majority of the supplies will be delivered to Europe via EDF Trading, a subsidiary of French utility giant EDF. The move highlights how the oversupplied market is posing challenges for exporters who have relied on steady demand from traditional importers like Japan.
Despite its move into selling, JERA will outpace Korea Gas Corp. as the world's largest LNG buyer from July, at which time it plans to complete the integration of its parent companies' existing fuel contracts.
JERA expects to purchase around 40 metric MMtpy of LNG, most of which will be used for power generation. In the year to March 31, Tokyo Electric Power Co. and Chubu Electric Power Co. purchased over 33 metric MMt of LNG for power use.
However, the International Energy Agency expects Japan's LNG demand to shrink to 72 MMt in 2020 and to 62 MMt in 2030, vs. 85 MMt in 2015.
Global LNG consumption, on the other hand, is anticipated to expand by 45% from 2014-2020, according to the Japanese government.
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