Japan's JERA sees Russian LNG imports replaceable by volume: president

Japan's largest power generation company JERA considers Russian LNG imports replaceable should delivery difficulties arise as they represent less than 10% of its total procurement volume of about 30 million mt/year, President Satoshi Onoda said May 12.

"In the event of losing Russian LNG [supply], we believe, we will be able to procure the volume, which account for less than 10% of the LNG procurements via alternative procurements," Onoda told an online press conference.

"We will need to look at how [the situation] will soar natural resources prices and have implications, which we will need to carefully watch and respond to the situations," Onoda said.

JERA, which does not procure spot LNG from Russia, however has initiated internal discussions on what to do with its Russian LNG term contracts, although it does not currently see any issue for lifting the term supplies, he added.

Onoda's remarks come as pressure mounts on energy imports from Russia following Russia's invasion of Ukraine.

Japanese Prime Minister Fumio Kishida said May 9 that Japan will ban "in principle" Russian oil imports following the latest commitment by leaders of the G7.

G7 leaders agreed May 8 to phase out Russian energy, including oil, "in a timely and orderly fashion," while ensuring "stable and sustainable global energy supplies and affordable prices for consumers."

Tokyo's latest move comes a month after the government's announced decision April 8 to ban Russian coal imports in phases as part of an earlier commitment by G7 nations.

Russia, the fifth-largest supplier to Japan, accounted for 9% of total LNG imports of 74.32 million mt in 2021, according to the Ministry of Finance data.

Spot procurements

JERA, which procured a record-high 4.5 million mt of spot LNG in fiscal year 2021-22 (April-March), expects to see a similar situation in FY 2022-23, with the company already securing "very large volume" of spot LNG albeit not reaching the record volume, Onoda said.

Given deteriorating international situations coupled with impact from coal markets and shutdowns of other power plants in Japan, JERA finds it difficult to foresee its incremental LNG requirements, Onoda said.

"We see procuring more [spot LNG] to be extremely tough, and this is something we need to work out and coordinate together with our country," he added.

JERA's FY 2021-22 spot LNG procurements surged from 3 million mt in the previous fiscal year as the company had maximized its efforts to ensure stable electricity supply, responding to fluctuations in its power and supply-demand balance during the summer and winter seasons.

JERA Global Markets, the trading arm of JERA, issued a buy tender seeking 5-6 cargoes for June 2022 to February 2023 delivery on a JKM-linked basis, which closed on April 7, S&P Global Commodity Insights' Platts LNG Daily reported on April 5.

Platts LNG Daily reported April 8 that JERA awarded at least 5-10 cargoes at varying premiums to the monthly average of the Platts JKM prices.

However, market participants have reported on subsequent days that JERA and JERAGM had purchased ten to thirty cargoes, at a single digit premium to high teens premium to JKM monthly averages across varying months, according to market sources. The total purchased volume could not be confirmed with the buyers.