JERA, EDF in LNG optimization and trading JV

Japan’s LNG importing giant JERA signed a binding agreement with EDF Trading to form an LNG optimization and trading joint venture. 

Under the joint venture, the two companies intend to merge LNG optimizationn and trading activities into JERA Trading.

JERA said the merger follows its acquisition of EDF Trading’s coal business in April last year.

JERA will hold 66.67 percent of the equity in JERA Trading while EDF Trading will hold the remaining 33.33 percent in the company, with both having a joint responsibility and control in managing the new and expanded business.

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 optimizing LNG on a global basis, establishing a more liquid market, and, over time, developing a clear pricing signal for LNG in Asia, JERA said in a statement.

Through the partnership both JERA and EDF aim to better position the company to respond to the uncertainties of LNG demand in Japan and Europe.

The companies will combine their LNG optimization and trading activities into JERA Trading which will become the exclusive optimizer for JERA and EDF, managing their collective short and medium term LNG optimization activity. 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 long-term procurement activities.