Japan's largest liquefied natural gas buyer, JERA, is initiating discussions with global suppliers for potential additional purchases. This move aims to mitigate risks stemming from worsening Middle East supply disruptions. Approximately 20% of global LNG supply is currently offline due to the U.S.-Iran conflict impacting QatarEnergy facilities. Qatari Energy Minister Saad al-Kaabi indicated that a return to normal deliveries could take months.
JERA manages roughly 35 million metric tons of LNG annually, with about 5% of its shipments traversing the Strait of Hormuz. While no immediate shortage is present, the company is exploring extra procurement options with existing long-term contract partners. JERA's CEO, Yukio Kani, emphasized that planning solely on a quick resolution would be overly optimistic.
If the crisis intensifies and the Strait of Hormuz remains closed, JERA may collaborate with the Japanese government on measures like energy conservation and restarting dormant power plants, including coal-fired facilities. The Middle East situation has reignited discussions on energy security, with some coal suppliers reporting increased customer interest in alternative options.
U.S. LNG developer Venture Global, a JERA supplier and the second-largest U.S. exporter, views the current market volatility as "very short-term." The company is proceeding with its CP2 LNG project in Louisiana, expected to begin production next year, which could significantly influence fuel market prices.