The Japanese JERA Co. Inc. reported on Friday $35 billion (JPY 4.74 trillion) in net sales for its fiscal year (FY) ending March 2023 (FY 2022), a 71.1 percent increase, mainly due to the increase in the unit price of income in electricity sales.
Electricity volumes sold, however, fell 0.4 percent to 255.1 terawatt-hours.
The power generation company’s profits rose 214.4 percent to $131 million (JPY 17.8 billion) between April 2022 and March 2023 compared with the previous fiscal year, it said JERA said in a press release.
Profit excluding the lag effect fell 19.4 percent to $1.5 billion (JPY 200.3 billion) “mainly due to the impact on spot LNG procurement and reserve obligations constructions, etc., despite JERA Global Markets Pte. Ltd. (JERAGM) increased profits and gain from the sale of LNG,” the Tokyo-based company said.
“Compared to the forecast from 2022/Q3 [third quarter]profit excluding delay decreased by 99.7 billion yen, due to the loss in the valuation of coal contracts, etc. and the additional constructive obligation, etc.,” he said.
JERA forecast profits of $2 billion (JPY 300 billion) for fiscal 2023.
Refocus on LNG
On the same day, it announced a 20-year deal with Venture Global CP2 LNG LLC for the Japanese company to buy about one million metric tons of liquefied natural gas (LNG) a year from the partner-operated CP2 project in the US .
The deal follows another LNG deal JERA has signed with Korea Gas Corp. (KOGAS). It said on April 10 that it had signed a memorandum of understanding with KOGAS to explore cooperation in the exchange of LNG, citing supply challenges from the war between Russia and Ukraine.
The agreement with Venture Global CP2 “will enable JERA to secure LNG in a highly flexible manner and is expected to assist JERA’s ability to respond to volatility in domestic electricity supply and demand.”
Japan regained its position as the world’s top LNG importer last year, the International Energy Agency (IEA) said in its gas market report for the first quarter of 2023. The third economy world’s largest imported 71.998 million metric tons of LNG in 2022, according to Japan was the world’s largest importer of LNG from 2015 to 2019, according to a 2020 IEA report that predicted the country of more than 125 million inhabitants would hold this position until 2022, after which it would be overtaken. by China
Announcing the deal with KOGAS, JERA noted: “Russia’s invasion of Ukraine has created a severe energy environment, such as reduced pipeline gas supplies to Europe, and uncertainty regarding energy supplies worldwide is increasing dramatically.”
Russia and the US have been Japan’s main sources of LNG. Last year it bought 6.869 million metric tons of LNG from Russia and 4.136 million metric tons from the US, according to the finance ministry. In 2021, Japan imported 6.567 million metric tons from Russia and 7.07 million metric tons from the US, according to ministry figures released on Nov. 11, 2022.
Japan is expected to remove Russian energy as part of punitive responses by the Group of Seven (G7), of which it is a member, against Russia over its invasion of Ukraine.
The G7, which also includes the US and Germany, pledged on May 8, 2022 in a joint leaders’ statement to eliminate “our dependence on Russian energy, including by eliminating or banning the import of Russian oil” . However, the informal group has not set a timetable, opting to achieve a Russian energy divorce “so as to give the world time to secure alternative supplies”.
Despite domestic demand, JERA managed to export LNG, making a profit of $862 million (JPY 117.5 billion) in fiscal year 2022. It secured deals for the sale of its “surplus” LNG fuel overseas.” to deal with risks,” JERA said in Friday’s earnings report.
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