Latest news with #Jera
Japan Times
a day ago
- Business
- Japan Times
China is challenging Japan's LNG dominance. What does that mean for Japanese buyers?
Over the past four years, a big shift has taken place in the market for one of the world's fastest growing and most important energy sources. Japan, long the world's leading consumer, investor, and distributor of liquefied natural gas (LNG) has seen its position overtaken by China. In 2021, China became the largest importer of LNG, and this year, according to data from BloombergNEF, China now has the most long-term LNG contracts, is expanding its LNG infrastructure, has a growing presence in markets traditionally dependent on trade with Japan — such as Qatar and Malaysia — and is even increasing imports from the United States and Australia. For countries like Malaysia, Qatar, and Australia, China's growth has been responsible for nearly all of their increase in LNG exports over the past five to seven years. And China's role is expected to increase as the country expands its LNG port infrastructure and carrier fleet, putting it in direct competition with Japan's major LNG importers, including utilities like Jera and Osaka Gas and trading houses Mitsui, Mitsubishi Corp., Marubeni, Sumitomo and Itochu. 'We still believe that more LNG growth is coming from China,' said Ziyue Daniela Li, a senior associate with BloombergNEF's Asia-Pacific gas team. The potential impacts are varied. Japanese companies, long accustomed to being the sole bidder for long-term contracts, could see themselves outbid by China. Traders, on the other hand, may see increased competition and cost-cutting when reselling LNG. That competition will inevitably create winners and losers among those firms, but when it comes to curbing emissions, there is no victory to be found. Indeed, China's growth, alongside Japan-led investments in LNG power plants, ports, and pipelines in South and Southeast Asia, is almost certainly going to lead to increased fossil fuel production, just as scientists implore the world to shift away, rapidly, from all dirty energy sources. Energy security With few fossil fuel sources of its own, Japan has long been dependent on imports to fuel its power plants, factories and transportation infrastructure. Japan has among the highest net energy imports of any OECD country, at 87.2%, compared to 35.8% for India and 69.8% for Germany. 'Japan doesn't have a lot of its own natural resources,' said Yuriy Humber, the founder of Japan NRG, a Tokyo-based energy intelligence company. 'So Japan has to be able to plan its own energy needs in a rather conservative way to ensure that, in case of emergency, (like) a sudden surge in demand, it's able to fulfill its own sort of energy needs.' The Negishi LNG Terminal, which is jointly operated by Tokyo Gas and Jera, in Yokohama. From 1969 until 2021, Japan was largely the biggest importer of LNG on an annual basis. | Reuters After the end of World War II, coal and petroleum imports were the main sources of energy. But that would change in 1969, when the first ship transported LNG from Alaska to Japan. Japan has been hooked ever since. Over the next three decades, Japan would build the world's largest LNG infrastructure, and it became the largest consumer of the fossil fuel, with Indonesia and Malaysia being its primary sources in the early days. In fact, many credit Japan's rapid economic growth in the late 20th century to the ready availability of cheap LNG. 'Japan is not only a big importer, but (its) companies are important players in the (international/global) LNG trade sector,' said Humber. From 1969 until 2021, Japan was largely the biggest importer of LNG on an annual basis, with growth picking up after the March 2011 meltdown at the Fukushima No. 1 nuclear plant led to the country's entire nuclear fleet being shut down. Japan was able to maintain stable LNG prices due to its ability to sign medium- and long-term contracts, which was most clear when LNG prices spiked globally — but not in Japan — after Russia's invasion of Ukraine in early 2022. Japanese companies and state-backed agencies like the Japan Bank for International Cooperation (JBIC) and the Japan Organization for Metals and Energy Security (JOGMEC) play a key role in natural gas and LNG projects around the world, providing loans and concessionary finance for gas production and export infrastructure projects in Mexico, Malaysia, and Australia, among others. A tanker transporting LNG is tugged toward a thermal power station in Futtsu, Chiba Prefecture. After the end of World War II, coal and petroleum imports were Japan's main sources of energy. But that would change in 1969, when the first ship transported LNG from Alaska to Japan. | Reuters 'LNG has a lot of positives,' said Filippo Pedretti, an assistant researcher at Japan NRG. 'It's easily deployable, cheap, and seen as a cleaner source of energy compared to oil and coal, and Japan believes LNG can be a useful source towards transitioning towards a cleaner economy.' Wesley Morgan, a research associate at the Institute for Climate Risk and Response at UNSW Sydney, believes that Australia's massive LNG expansion in the past decade would not have been possible without Japan. 'Energy security anxieties in Japan mean a tendency to see Australian gas as essential for energy supply,' Morgan said. 'Japanese investment is really crucial in propping up Australia's gas exports.' China's LNG growth In many ways, China's economic rise and growing energy demand echoes Japan's past, with energy security concerns related to the Russia-Ukraine war also playing a role, says Pedretti. 'China's LNG development strategy is trying to follow a similar path to Japan,' said Pedretti. 'They try to diversify sources, build domestic infrastructure, but their situation is also different as they have their own gas resources and buy pipeline gas from Russia and Turkmenistan.' A LNG tank at Tokyo Gas' LNG terminal in Sodegaura, Chiba Prefecture. Japan has been increasingly pushing LNG as a transition fuel in South and Southeast Asia, touting it as a low-carbon alternative to coal. | Reuters China's rise in this market came just as Japan peaked. According to the International Energy Agency, Japan's LNG imports began falling in 2015, due to less energy demand from a shrinking population, greater energy efficiency, and more power generation from solar and wind. Though the potential growth of data centers and energy for AI might change projections, many believe that LNG demand in Japan is in long-term decline. But because of long-term contracts, which can be as long as 25 years, this has created a challenge, as companies like Jera now have more LNG than their customers in Japan need. One way to deal with that is to offload excess LNG to other countries. In fact, through initiatives like the Asia Zero Emissions Community (AZEC), Japan has been increasingly pushing LNG as a transition fuel in South and Southeast Asia, touting it as a low-carbon alternative to coal. This has allowed Japanese companies to not only offload excess capacity, but also benefit from exporting gas turbines, pipelines and LNG terminal technology. 'Japan is aggressively promoting the expansion of LNG-fired power in Southeast Asia,' said Evan Gach, a program coordinator at the Tokyo-based nonprofit Kiko Network. He's concerned that this could result in 'environmental destruction ... and increased greenhouse gas emissions in Asia.' Many in the Japanese government have touted LNG as a cleaner alternative to oil and coal because it produces fewer emissions when burned for electricity. But scientists have urged the world to ween itself off of all fossil fuels, and recent studies have raised questions over whether LNG is even cleaner than coal when accounting for its lifetime emissions, including pollution resulting from its transportation, methane emissions and the liquefaction process to reduce its volume. 'It's a historic bet on a dangerous fossil fuel,' said Morgan of UNSW Sydney. 'We can shift straight from coal to wind, solar and batteries without the need for LNG.' Tanker trucks carrying LNG from a terminal cross the Xihoumen Bridge in Zhoushan, China. While Japan still has the largest number of LNG import terminal capacity and regasification facilities, China has many under construction and could overtake Japan in both categories by 2030. | Reuters Thus far, China has not been a destination for much of Japan's excess LNG. In fact, China might also pose a threat in this area. In the not-so-distant future, China may also find itself locked into too many long-term LNG contracts and might also seek to re-export LNG abroad. 'Ultimately, slower LNG demand in China and more aggressive reselling by Chinese traders may only exacerbate oversupply and margin erosion for LNG investors,' wrote Sam Reynolds, a research lead at the Institute for Energy Economics and Financial Analysis. Chinese companies are increasingly expanding their capability as traders. While Japan still has the largest number of LNG import terminal capacity and regasification facilities, China has many under construction and could overtake Japan in both categories by 2030. Similarly, while Japan still has a larger LNG fleet, with 175 carriers, China has the most ships on order, with 61. According to BloombergNEF, Chinese companies have also opened up LNG trading desks, competing directly with Japanese companies. 'Japan's presence will eventually diminish,' said Pedretti. 'They won't be able to grow, both in terms of shipping and as a trader. But I think Japan will try to keep its presence in the market.' Reselling LNG to Southeast Asia, Pedretti added, is key to that. Even if it does not control the market in the same way, Hiroshi Hashimoto, a senior fellow at the Institute of Energy Economics, Japan, a Tokyo-based think tank, does not see a shift away from domestic dependence on the fuel that has powered Japan's economy since 1969. 'Japan is expected to continue requiring LNG to maintain an appropriate balance of energy sources in its future energy mix,' said Hashimoto. 'LNG will not lose its role in Japan's future energy picture.'
Japan Times
3 days ago
- Business
- Japan Times
Japan's top LNG buyer inks preliminary pact with Alaska project
Japan's largest liquefied natural gas (LNG) importer, Jera, signed an expression of interest to explore buying the fuel from a long-delayed export project in Alaska, according to people with knowledge of the matter. Jera, which is also the nation's largest power producer, inked the nonbinding pact ahead of a summit in the U.S. state next week, said the people, who asked not to be identified because the talks are private. Jera did not specify in the expression of interest how much LNG the company would potentially buy, the people said. Jera didn't immediately respond to a request for comment. The move is a small step forward for the $44 billion Alaska LNG export project, which has been proposed in various forms for decades but struggled to secure binding long-term contracts and investments. The LNG pact comes as Japan's government is seeking to smooth the path toward a tariff deal with the United States. Proponents of the project, which has been championed by U.S. President Donald Trump, are using the Alaska Sustainable Energy Conference next week as a way to rally support. Takehiko Matsuo, vice minister for international affairs at the trade ministry, will attend the gathering, trade minister Yoji Muto said to media on Friday. Taiwan will also send a delegation to the project. South Korea's energy ministry and Korea Gas are expected to attend the same discussions, the Herald Business Newspaper reported earlier this week.
Japan Times
28-04-2025
- Business
- Japan Times
Japan's top gas buyer mulls joining Alaska LNG export project
Jera is considering participating in a proposed liquefied natural gas (LNG) export project in Alaska, as part of Japan's efforts to negotiate a trade deal with the United States. "We see Alaska as one of the promising procurement sources,' Naohiro Maekawa, an executive officer at the world's biggest LNG buyer, said at a news conference on Monday. The long-delayed $44 billion Alaska LNG facility is trying to court Asian importers, including Japan, South Korea and Taiwan, and has became a pet project of U.S. President Donald Trump. The plant has been proposed in various forms for decades, but has struggled to secure binding long-term contracts and investment, and requires the construction of a pipeline stretching more than 1,300 kilometers. Prime Minister Shigeru Ishiba said earlier this month that the project should be included in a trade package, while South Korea may also consider participating. The U.S. is seeking a summit to discuss the project with Japan and South Korea's ministers on June 2, the New York Times reported. Jera, Japan's biggest electricity producer, earlier Monday said its profit slumped 54% to ¥183.9 billion ($1.3 billion) in the financial year through March, due to lower income from power generation domestically and abroad. The company sees profit for this year at ¥230 billion. Tokyo Gas, another Japanese LNG buyer, said it is also monitoring Alaska LNG. "We will keep a close eye on the project,' chief financial officer Taku Minami said at a briefing on Monday. The company isn't in talks to increase imports of U.S. LNG in 2026, he added.
The Guardian
26-02-2025
- Business
- The Guardian
Why has BP pulled the plug on its green ambitions?
BP has angered climate groups by abandoning its green ambitions to instead invest about $10bn a year in a string of new oil and gas projects to help reverse its flagging fortunes. The strategy, put forward by its chief executive, Murray Auchincloss, pulls the plug on BP's 2020 plan to become a net zero energy company, which he claims was 'misplaced' and went 'too far, too fast'. Auchincloss said: 'We made some bold strategic changes, accelerating into the energy transition while progressively reducing our hydrocarbon business. 'We then saw Covid, the war in Ukraine, a recession, and the shift in attitudes of markets and governments had a fundamental impact on the energy system.' It is the first comprehensive reset of the company's plans since 2020. In simple terms, the company plans to focus on the areas of its business that make the most money. This means increasing investment in its oil and gas business to just over $10bn a year, of which 70% will be invested in oil and 30% will go to gas. It hopes this will lead to at least 10 major oil and gas projects by 2027, and another eight by 2030. At the same time it will slash $5bn from the spending plans for its low-carbon energy and retail service stations. It has already spun off of its offshore wind interests to create a 50-50 joint-venture with the Japanese power generator Jera, and it plans to sell off a stake in the solar farm developer Lightsource BP, too. Low-carbon energy will make up less than 5% of its annual investment, versus about 75% from oil and gas extraction. Its previous plan involved putting more than 20%, or $3-$5bn of its $14-$18bn capital spending, into low-carbon. 'I'm truly excited,' said Auchincloss. 'It's very cool.' It is a stark shift from the plan set out in 2020 under the then boss, Bernard Looney, when BP won praise from green groups for committing to the most ambitious energy transition plan of any major oil company. The company vowed to 'reimagine' itself as a net zero energy company by 2050 by cutting oil and gas production by 40% by 2030 and growing its low-carbon energy investments ten-fold to $5bn a year by the end of the decade. Under these plans BP hoped to increase its renewable generating capacity from 2.5GW in 2019 to 50GW by 2030. It also promised to shrink its oil and gas production from 2.6m barrels of oil and gas to 1.5m barrels over the same period. However, by 2023 BP had begun to water down its strategy. It raised its oil and gas production target from 1.5m barrels a day by 2030 to 2m barrels, saying Russia's war on Ukraine meant the world would need more sources of secure energy. BP has come under pressure from investors to turn its back on its remaining green ambitions after the company's share price slumped by a quarter in the past two years, while the market value of rival oil companies has climbed. Auchincloss, BP's former finance chief, told investors that the company's faith in the green energy transition had been 'misplaced' and that the company had gone 'too far, too fast' in recent years. The green strategy faced two major obstacles: first, a post-Covid bottleneck in global supply chains combined with the recent surge in interest rates has made investing in green energy more expensive. Second, the recent surge in global oil and gas prices has made producing fossil fuels more profitable. There is a third problem now, too: the notorious activist hedge fund Elliott Management has amassed a significant stake in BP, which could embolden it to call for sweeping changes to restore its lost value – including a breakup of the company and a boardroom cull. It is not clear whether BP's investors are convinced by this plan. Equity analysts at HSBC described the strategy as 'the fundamental reset we'd been waiting for'. In a note to investors the bank said: 'We've argued in previous research that capital allocation and a change in narrative were key to success of BP's long-awaited [capital markets day]. To be fair, it does feel like BP has heard the market's message on the need for a fundamental reset loud and clear.' However, the company's share price fell 3% after it unveiled the new strategy. This may reflect short-term frustrations over BP's plan to reduce its share buybacks to no more than $1bn a quarter, down from $1.75bn previously, to shore up its balance sheet. But it may also reflect investor fears that the plan offers too little, too late. There has been outrage from climate campaigners, with protest plans targeting the company's London HQ emerging hours after the strategy was announced. Charlie Kronick, a senior climate adviser for Greenpeace UK, said the reset was proof that fossil fuel companies 'can't or won't be part of climate crisis solutions'. He called on the government to 'ensure companies like BP pay their share for the climate damage they're causing'. The plan could be bad news for BP's long-term financial health, too, according to Mark van Baal, the founder of the shareholder action group Follow This. He said BP risked 'a dramatic decline in share value' as the reality of the climate crisis became apparent. 'Sooner or later oil companies will be held liable for the costs for climate damage,' Van Baal said.
Sky News
11-02-2025
- Business
- Sky News
BP at risk of takeover without renewed oil and gas focus success
It is nearly five years to the day since Bernard Looney, the then new chief executive of BP, set out a radical strategy for the oil major to go net zero by 2050. Under that strategy, BP would invest more in low carbon energy sources and less in oil and gas, even to the extent of leaving in the ground some of the oil and gas it had originally planned to extract. Investors were initially sceptical but prepared to give Mr Looney the benefit of the doubt and particularly when, a year later, he was able to argue that things were turning BP's way with, for example, the US rejoining the Paris climate agreement. Today, though, it feels as if BP is repudiating all of that as the company promised to "fundamentally reset" its strategy. A capital markets day, due to take place on 26 February, is expected to announce that BP is reducing its low carbon investments in order to focus on its core oil and gas assets. Murray Auchincloss, who succeeded Mr Looney at the end of 2023 after the latter failed to disclose relationships with colleagues to the board, said this morning: "We have been reshaping our portfolio - sanctioning new major projects, and focusing our low-carbon investment - and we have made strong progress in reducing costs. "Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns. It will be a new direction for BP and we look forward to sharing it at our capital markets update on 26 February." That reset is expected to see BP abandon plans to reduce its oil and gas production over time. The company had already reduced its renewables investment and spun off its offshore wind assets into a separate joint venture with Japanese partner Jera. The reset may even see BP abandon a pledge made by Mr Looney to reduce its oil production by 2030 to 70% of its level in 2019. The company has already scaled back a pledge to reduce its carbon emissions by the end of the decade from 35-40% of 2019 levels to between 20-30%. The news, while it will dismay climate activists, points to a new-found pragmatism at BP. The company's share price has underperformed that of its rivals, particularly US players such as Exxon and Chevron, who have remained focused throughout on their core fossil fuel activities. Meanwhile, it emerged over the weekend that Elliott Management, the feared activist investor famous for its campaigns at some of the world's biggest companies, had taken an undisclosed stake in BP, placing further pressure on management. Mr Auchincloss last month announced plans to cut BP's workforce by 5% - reducing the headcount by 4,700 - as he seeks to achieve $2bn worth of cost savings. It is unclear what actions Elliott hopes BP will take but it would not be a surprise were it, for example, to demand BP demerges its renewables assets from its traditional fossil fuel assets to become a focused oil and gas company again. Analysts have also speculated that Elliott may agitate for the removal of Helge Lund, BP's chairman, who was a key driver of the strategy previously put in place under Mr Looney. Adding to pressure for change is the fact that the world has changed since Mr Looney's big announcement. Russia's invasion of Ukraine in 2022 highlighted the importance of oil and gas while Donald Trump is back in the White House and is promising to "drill, baby, drill", having already taken the US out of the Paris agreement again. Ironically, given the revived emphasis on oil and gas, it was these activities which proved a drag on BP's earnings during the final three months of 2024. Underlying replacement cost profit, the accepted industry reporting standard, fell to $1.17bn from $2.99bn during the same period in 2023 due, among other things, to weaker refining margins. For the year as a whole, underlying replacement cost profit fell to $8.92bn from $13.84bn in 2023. Investors were less focused on those numbers today. For them, all eyes are now on 26 February. Longer term, unless Mr Auchincloss can get the share price higher, BP looks to be a sitting duck for a possible takeover.
