Japan's Largest LNG Importer Offloads Stake in Freeport Terminal

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--JERA, Japan's largest liquefied natural gas (LNG) importer, said it would sell off a portion of its stake in the Freeport LNG export terminal in Texas for around US$380 million.

The company said it would sell 15% of its 100% stake in the Gulf Coast LNG Holdings subsidiary, which itself holds a minority stake in Freeport, to its Japanese counterpart, Japan Petroleum Exploration Company Limited (JAPEX) (Tokyo).

JERA will stay on, however, with a 25% stake in the first train at Freeport and keep its 20-year purchase agreement for some 2.3 million metric tons per year (mtpa) of LNG.

The company was decidedly mum on the intent behind the sale.

"JERA decided to sell part of its interest as a result of a careful assessment for optimizing JERA's asset portfolio," the company said Thursday.

In a business strategy outlined earlier this month, JERA said its focus was centered around LNG, renewables, hydrogen and ammonia. On LNG, the company said it was targeting some 35 mtpa in volume through at least 2035.

With few reserves of its own, Japan relies heavily on LNG imports to satisfy domestic demand. A March report from the Institute for Energy Economics and Financial Analysis (IEEFA) found that Japan was no longer the world leader in LNG importers, with companies such as JERA expecting a surplus in volumes for the rest of the decade.

The IEEFA attributed the decline to an increase in nuclear and renewable power on the Japanese grid.

JERA also holds an interest in the Scarborough LNG project off Western Australia alongside Woodside Energy.

Australia, Qatar and the U.S. are among the world leaders in LNG exports, with the latter assuming the top position, provided all export terminals are operating at peak capacity.

The U.S. first exported LNG in 2016.

One of the largest export terminals in the country, Freeport can receive up to 2 billion cubic feet per day (Bcf/d) of natural gas, primarily taken from the inland shale basins. Of the 23 vessels laden with LNG that left U.S. export terminals during the seven-day period ending May 22, five of them left from Freeport. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Plant Database can click here for the plant profile.

That made it the second-busiest export terminal for the week, behind Sabine Pass. Operations at Freeport, however, have been problematic.

An over-pressurized pipe triggered an explosion and fire in June 2022 that hobbled the facility for much of the year. Problems with some of the electric motors meant the plant was performing below peak capacity for much of 2023, while freezing temperatures in January of this year left it facing technical challenges for weeks.

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