JERA seeks more LNG to hedge growing Middle East risk
JERA, Japan's largest liquefied gas buyer, has begun discussions with global suppliers about possible additional purchases to protect against Middle East supplies worsening. This is despite a major LNG supplier saying the price spike would be short-lived.
The U.S./Israeli war against Iran has caused the QatarEnergy LNG plants to be shut down, which has disrupted energy supplies in the Middle East. Qatari Energy minister Saad Al-Kaabi stated last week that it could take several months for normal deliveries to resume.
JERA manages about 35 million metric tonnes of super-chilled diesel fuel per year, of which around 27 million are used in the domestic market. About 5% of JERA's shipments pass through the Strait of Hormuz.
VENTURE GLOBALIS SAYS VOLATILITY IS SHORT-LIVED
Despite the fact that there is currently no shortage of LNG, JERA is looking at possible additional purchases with suppliers who have long-term contracts with the company, said Kani to reporters in Tokyo, on the sidelines the Indo-Pacific Energy Security Ministerial and Business Forum.
It is still possible that the situation could?regulate within a few week. Kani stated that it would be a mistake to plan based on this assumption.
The average LNG delivery price to Northeast Asia in April was estimated at $ 19.50 per million British Thermal Units (mmBtu), a drop from the $22.50/mmBtu of the previous week. This was the highest price since mid-January, 2023.
Kani said that if the crisis worsens, with the war and closure of the Strait of Hormuz continuing, it may be necessary to work with the Japanese government and consider measures like asking consumers to conserve electricity and restarting power plants dormant, including coal-fired ones.
Steven Read, President of Global Coal Sales Group, which markets coal produced by U.S. mining company Signal Peak Energy and is the president of Global Coal Sales Group, said that the Middle East crisis had brought energy security?back to the table.
Read, who sells coal to Japan, among other countries, told delegates at the conference that "we've seen customers come in to discuss options." "We've had customers come back and say, hey, I think we may want another shipment."
Venture Global, the U.S.'s second largest LNG exporter, and a JERA provider, is convinced that the "tremendous volatility" of the market will be "very short term", said Chief Executive Mike Sabel at the conference.
We're incredibly optimistic about the long-term and middle-term strength of?the?market. Equity in the market. Supply coming online. He said that he expected a long-term, stable price for liquefaction.
Venture Global decided on Friday to move forward with the second phase of its CP2 project in Louisiana. Sabel stated that production should begin next year. "It will have a significant effect on fuel prices fairly quickly." (Reporting and editing by William Mallard; Yuka Obayashi, Katya Glubkova)
(source: Reuters)
