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Japan’s energy company JERA and EDF Trading Limited have signed binding agreements to form an LNG optimisation and trading joint venture to merge their activities into JERA Trading (JERAT).
With demand for LNG in Japan becoming increasingly variable and difficult to predict and the ramp up in US LNG liquefaction, Europe has become a key balancing market for excess global LNG. As a result, JERA and EDFT believe that there is significant room for optimising LNG on a global basis, establishing a more liquid market, and, over time, developing a clear pricing signal for LNG in Asia.
The companies will combine their LNG optimisation and trading activities into JERAT which will become the exclusive LNG optimiser for JERA and EDF S.A., managing their collective short and medium term LNG optimisation activity. JERA (with a 66.67% share of JERAT equity) and EDFT (with 33.33% of the shares) will have joint responsibility and joint control in managing the new and expanded business and each will have two Executive Directors. The Chief Executive will be appointed by JERA.
Recognising the expansion of JERAT’s business globally, the parties agreed to change the name of JERA Trading to “JERA Global Markets”.
The joint venture it is subject to customary regulatory approvals and is expected to be completed by early 2019.
“LNG remains a strategically important fuel for JERA and EDF and this agreement will bring more flexibility and scale to both partners without affecting JERA’s and EDF’s activities,” according to JERA.
As part of this transaction, EDF Trading North America, one of the leading marketers of gas and power in the region will be responsible for supplying electricity and natural gas to meet JERA’s capacity requirements at the Freeport liquefaction terminal.
Established in 2015, JERA is an equal joint venture of two major Japanese electric companies, TEPCO Fuel & Power Incorporated and Chubu Electric Power Company, and is a world’s leading buyer of the supercooled fuel LNG.
Source: EDF Trading Limited