Japanese LNG buyer JERA Co buys substantial stake in Freeport LNG export business in Texas

Tuesday, 23 November 2021
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LNG News Editor: 

JERA Co. Inc., the largest Japanese liquefied natural gas buyer, has purchased a significant stake in Freeport LNG at Quintana Island in Texas and will invest in expansions as part of a plan to be able to direct cargoes to Japan even when global supplies are tight.

The Japanese company’s US subsidiary JERA Americas Inc., has concluded a securities purchase agreement with infrastructure fund Global Infrastructure Partners to acquire around a 25.7 percent interest in Freeport for $2.5 billion.

Texas asset

JERA said in a statement that the acquisition was expected to be completed after the necessary approval and authorization procedures.

For this transaction, JERA appointed US investment bank Goldman Sachs as its exclusive financial advisor and Sidley Austin as its legal advisor.

The Freeport plant is located in Brazoria County, south of Houston, and is run by Chief Executive Michael Smith, an energy entrepreneur who developed the plant with almost 15 million tonnes per annum of LNG capacity.

It has use-or-pay liquefaction tolling agreements for most of the output from the three Trains with customers including JERA as well as Japanese utility Osaka Gas and European-based companies, UK major BP and German utility Uniper.

JERA noted that, together with Freeport LNG, the Japanese company has already contributed to the stable operation of Train 1 of the Freeport liquefaction project through its participation in that subsidiary.

“As a result of the transaction, JERA will not only be involved in the entire existing Freeport LNG project (three Trains with an annual production capacity of approximately 15.45 MTPA) but will also work with Freeport to advance new LNG projects including production capacity expansion and the development of Train 4,” explained the Japanese company.

“By leveraging the knowledge and expertise it has accumulated through its global LNG value chain business and power plant operations, JERA will work together with Freeport on its various businesses,” added the Tokyo-based company.

JERA as the largest Japanese LNG buyer has 35 MTPA of volumes and controls a fleet of 20 LNG carriers.

Additionally, it is Japan’s biggest fossil-fuel generator being owned jointly by Tokyo Electric Power Co. and Chubu Electric, the two largest power companies.

The company currently operates and provides fuel for a total of 26 power plants in Japan and imports LNG into 11 of Japan’s network of 37 terminals.

“In Asia, there is demand for both decarbonization and a stable energy supply to support economic growth,” said JERA.

“As evidenced by the current gas price hikes around the world, securing a stable supply of competitive LNG is becoming increasingly important,” stated the company.

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