Japan's JERA says secured three 'Strategic Buffer LNG' cargoes until Feb 2024

Japan's JERA said Nov. 29 it has secured a total of three LNG cargoes over December 2023-February 2024 for the country's "Strategic Buffer LNG," or SBL, framework after the company was approved as the first supplier by the Ministry of Economy, Trade and Industry on Nov. 24.

JERA said it has secured one LNG cargo a month of SBL over the three months and will supply the SBL cargoes based on METI's request.

When asked to comment on its outlook for winter LNG procurements, JERA sees no issue in procuring LNG for the winter demand season to date, President and CEO Hisahide Okuda told a press conference in Tokyo.

"We do not see any issue in securing [LNG for winter] as of now," Okuda said, declining to elaborate.

Starting in December, Japan will begin operating "Strategic Buffer LNG" cargoes in order to be prepared for any supply issues, starting with a minimum of one LNG cargo a month during the country's peak winter demand months over December 2023-February 2024.

Okuda declined to comment on whether JERA had additionally procured LNG or used a part of JERA Global Markets, or JERAGM, supply portfolio for SBL.

"We are working to operate it [SBL] as part of our group overall," Okuda said.

The move is part of Japan's efforts to enhance its LNG security after a series of supply issues in recent years, culminating in the global energy crisis sparked by Russia's invasion of Ukraine last year.

As part of its immediate response to the energy crisis, Japan has opted to introduce buffer LNG as a type of distribution stocks using a commercial flow, for the minimum 210,000 mt over the three months.

The SBL framework is the first of its kind for Japan, where it has only had commercial stocks for LNG unlike crude oil and refined product reserves held by the government and the private sector, as well as national LPG reserves.

JERA is Japan's largest power generation company that handles close to 40 million mt/year of LNG, with a controlled fleet of 20 LNG carriers held by JERAGM, a joint venture between JERA at 67% and France's EDF Trading at 33%.

Panama Canal

Responding to a question over possible impact on its LNG procurements from increasingly tightening transits in the Panama Canal, Okuda said JERA is "monitoring situations" including whether they could deteriorate further.

"For now, we do not have any direct impact on our [LNG] procurements," he said.

The JERA-chartered Maran Gas Andros is due to arrive in Port Said, the northern entrance of the Suez Canal, on Dec. 1, and inFuttsu in Tokyo Bay on Dec. 16 after having loaded a cargo and left the US Freeport terminal in Texas on Nov. 14, according to S&P Global Commodities at Sea.

The Maran Gas Andros is among an increasing number of LNG carriers loaded with US LNG cargoes heading for Northeast Asia via the Suez Canal route in light of tightening restrictions in the Panama Canal caused by a historic drought.

The number of booking slots available for transiting the Neopanamax locks (for ships including LNG carriers, container ships and Very Large Gas Carriers), which stood at 10 per day prior to this month, has been reduced to seven currently and will fall to six for December, and then five from Jan. 1, 2024, according to the Panama Canal Authority.

"This 50% decrease in transit slots for Neopanamax vessels will presumably leave one slot a day for LNG tankers to cross either north or southbound, essentially restricting laden LNG traffic from the United States to 15 crossings per month," S&P Global analysts said in a report Nov. 16.