JERA Trading International Pte. Ltd. is a wholly-owned subsidiary of JERA and holds 67% of the shares in JERAT. EDFT is a wholly-owned subsidiary of EDF S.A. (EDF) and holds 33% of the shares. The shareholders in JERAT will have joint responsibilities in managing the business.
As explained, 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 and there is significant room for optimising LNG on a global basis, establishing a more liquid market, and over time developing a clear pricing signal for LNG in Asia.
In this context, JERA and EDFT have been in discussions regarding an LNG optimisation joint venture. This new step in the partnership would build on the successful completion on 4 April 2017 of the collaboration on coal and freight trading through JERAT.
By bringing together their resources, the parties aim to respond to LNG uncertainty in Japan and Europe, expand their global portfolio, optimise their operations and improve the competitiveness of LNG in the market, as well as supporting the development of deeper, more liquid LNG markets.
Subject to the completion of binding agreements and approval by the respective corporate governance bodies of both parties, JERA and EDFT would combine their LNG trading activities through JERAT, which would become the exclusive LNG optimiser for JERA and the EDF Group, managing their collective short-term optimisation activity in the LNG markets.
Following the transaction, JERAT would become one of the largest utility-owned seaborne energy optimisers, with activities in the LNG, coal and freight markets spanning Asia, the Pacific and the Atlantic Basins.
As part of the transaction, JERA and EDFT are in discussions regarding collaboration on the optimisation of gas and power supplies for JERA’s US liquefaction position at the Freeport LNG terminal, so that they are better able to coordinate global LNG optimisation with gas and power optimisation in US.
Discussions will continue towards a final agreement which is expected to be reached in 2018.