EDF Trading, a wholly-owned subsidiary of French power giant EDF, has signed an LNG sales and purchase agreement with Japanese LNG aggregator Jera Co Inc, one of the world’s largest buyers of liquefied natural gas.
Jera, a joint venture between Tokyo Electric Power Co. and Chubu Electric Power Co., will sell as much as 1.5 million metric tons of LNG between June 2018 and December 2020.
According to Bloomberg, Jera’s debut as a seller to Europe underscores how the oversupplied market has challenged traditional exporters, who have relied on steady, one-way demand from buyers in countries like Japan, the world’s largest consumer of the fuel.
Japan’s new role as a middleman adds further pressure on LNG producers, who are losing bargaining power because of the glut.
Jera will surpass Korea Gas Corp as the world's single biggest buyer of LNG with annual purchases of around 40 million tonnes once it fully integrates its parents' existing fuel procurement contracts from July. The joint venture was set up to buy fuel for power stations.
"This agreement broadens our relationship with Jera where we jointly operate a successful coal procurement and trading business in Singapore", said EDFT CEO John Rittenhouse. "LNG is an important fuel for the EDF Group and this is a natural extension of our activities with Jera," he said.
Jera's parent firms consumed more than 33 million tonnes of LNG for power generation in the year to the end of March, according to trade ministry data.
Japan’s LNG consumption is expected to fall to 72 million tons in 2020 and 62 million tons in 2030, compared to 85 million tons in 2015, according to data compiled by the government and the International Energy Agency.
Global demand is expected to grow by 45 percent between 2014 and 2020, according to a government presentation from earlier this month.