JERA targets Europe in EDF Trading LNG deal

Japan-based trading company JERA has signed a 1.5 million tonne sales and purchase agreement to sell LNG to London-based EDF Trading, for delivery to Europe.

The agreement, which covers two and a half years from June 2018 to December 2020, marks JERA’s entry into LNG trading in Europe, selling on destination-free LNG cargoes from US-based Freeport LNG, which will launch its first exports in 2018.

JERA says the price will be linked to European gas prices and the cargoes shipped to Europe during the contract period, adjusted freely at its own discretion. EDF Trading declined to say where in Europe it will land the shipments.

A joint venture formed in spring 2015 between Japanese utilities Tokyo Electric Power and Chubu Electric Power, JERA is the world’s single-largest buyer of LNG. It is positioning itself to sell surplus LNG to third parties, as oversupply pushes the industry towards spot and short-term cargoes.

EDF Trading is a subsidiary of French power utility EDF. Its LNG business includes purchase, supply and delivery, seaborne logistics, terminal capacity, regasification and nominations into pipeline networks.

The company has LNG master agreements with “all of the market’s key participants” and has been particularly active in Asia’s mature import markets, notably in Japan and South Korea.

“This agreement broadens our relationship with JERA, where we jointly operate a successful coal procurement and trading business in Singapore,” says EDF Trading chief executive John Rittenhouse. “LNG is an important fuel for the EDF Group and this is a natural extension of our activities with JERA.”