JERA looking to develop international partnership

Mar 05, 2017
6 min read
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Hiroki Sato, Senior Executive Vice President, JERA spoke exclusively to Pipeline Magazine about the firm’s plans to develop more international partnerships

What does the future for gas & LNG look like in Japan, and what could the future national energy mix look like by 2040?

Globally, JERA is one of the biggest buyers of LNG. Japan currently account for a third of the total trading volume across the world, however we suspect that this volume might be the peak.

The recommissioning of nuclear power stations and the development of new coal-fi red power stations, as well as the development of renewable energy sources, will have a massive effect on gas and LNG demand in Japan.

The decline in population figures will also play a part in the future of the sector, however there are so many factors and uncertainties. Who knows if demand will increase, who knows the future. Just like the oil price, it cannot be controlled.

What impact could the development of battery and fuel cell technology have on the energy landscape? How can natural gas play a role in this?

Battery and fuel cell technology is one of the trends in the energy sector. We cannot stop its growth, and so at JERA, we are looking for ways to take advantage of it whilst also furthering the development of the gas and LNG business. It is predicted that the new battery and fuel cell technology will affect the demand for gas and LNG, therefore it will undoubtedly play a significant role in the industry.

Does gas & LNG have a major long term role to play in a low-carbon global economy, or will renewable energies eventually supply all of our energy needs?

Environmentally friendly trends are inevitable in our future, especially following the Paris agreement. People think that fossil fuels such as gas, coal and oil are just transitional fuels to reach the final goal of a renewable world. But according to the latest IEA report, fossil fuel will remain a key aspect of our global primary energy supply up toward 2030. Currently, coal is the most popular form of fossil fuel, but toward 2030 we believe that gas and LNG will be the preferred choice of fossil fuel.

Please give us an update into your key international gas & LNG projects and joint ventures?

We are striving to maintain our world top-class o take volume, and so we are keen to develop our trading business within the global market. We have begun to make major strides, and this is clearly evident following our announcement of the binding SPA with Centrica, and the acquisition of EDF Trading’s coal business with possible wider collaboration platforms including LNG. LNG and gas is a very challenging business, but we will continue to establish beneficial partnerships

In terms of our key international joint ventures, we are looking to invest in several greenfi eld LNG projects, such as within Eastern Africa and North America. For us, they are key areas that we would like to see the development of the projects. We are also interested in further developing business networks within India, China, Taiwan and Singapore as we foresee that they will be big players in the future.

Where around the world do you see the most activity for new growth in gas & LNG production and upstream development?

New growth will be found in upstream development, but this is dependent on the movement of shale gas. America has invested in shale, and there is now the potential for China and Argentina to follow an identical route. Following its decision to leave the EU, there is some possibility that the UK might resume their fracking activity.

In terms of supply, the major players will be East Africa and North America, whilst in comparison China and the ASEAN countries will play a key role on the demand side.

What are you hoping to achieve with your company at Gastech 2017 in Japan?

We are looking forward to the event, but were surprised to hear that this is the first time in over a decade that Japan will be hosting an event of this calibre. Therefore, it is important to us that the conference and exhibition should be a success. As one of the largest buyers of gas and LNG it is inevitable that the event would be hosted in Japan.

We want the event to appeal to the global market and for them to see the conference as a key event for industry professionals to attend. It will enable the industry to explore the direction the sector will go in, and how to support its growth. Most importantly, it will be beneficial for not only buyers but suppliers, and there will be no difference between the two.

Who are you most interested in meeting at Gastech and which types of companies is it important that you meet with?

We are interested in meeting with all attendees. It is important for us and for the financiers that will be attending to meet with the delegates from the emerging markets such as India, Asia and the ASEAN nations.

They may be considered to have less credit worthiness compared with the traditional market players and are in need of financial support. Furthermore, as all of us are aware, the market is drastically changing toward the next decade. I suppose that it is the time to reconsider the financial mechanism to fi t such market situation.

This interview appeared in the Gastech Preview.