The world’s largest buyer of liquefied natural gas said there is a risk of more market volatility this year.
Spot LNG prices have fallen since last year’s record high, but that’s largely due to last winter’s good luck, said Yukio Kani, president and global chief executive of Jera Co. Warmer-than-expected weather and China’s pandemic restrictions reduced fuel demand. , he said in an interview in Tokyo.
This winter, with increased import capacity in Europe and increased demand from China after the end of pandemic restrictions, prices could rise again if there is severe weather, he said. There is no opportunity for buyers to “let their guard down,” Kani said.
Jera, a company between Tokyo Electric Power Co. Holdings Inc. and Chubu Electric Power Co., announced Friday that it agreed to a 20-year deal to buy LNG from Venture Global LNG Inc.’s proposed terminal. in Louisiana. While the company expects Japanese LNG demand to decline over the next decade, it could be surprisingly flat as more data centers and semiconductor factories are built, Kani said.
“Both of these facilities consume electricity, which makes it difficult to read the demand outlook,” he said.
Jera is also working to support Japan’s plans to use ammonia and hydrogen to decarbonize existing thermal power plants. The strategy has received pushback from other countries, most recently at the Group of Seven meeting of energy and environment ministers.
Using ammonia for electricity generation can create substantial demand that would justify investments in the supply chain, similar to how Japan helped birth the LNG industry 50 years ago, Kani said .
–With the help of Takaaki Iwabu.
