Japan’s JERA may consider Alaska as LNG supply option, exec says

By Yuka Obayashi and Katya Golubkova

TOKYO (Reuters) -JERA, Japan’s top power generator, may consider Alaska as a potential source of liquefied natural gas (LNG) supply, an executive said on Monday, as Japanese officials are heading to the United States this week for another round of tariff talks.

Alaska LNG, a proposed $44 billion project consisting of a pipeline and an LNG plant, has been a key part of President Donald Trump’s agenda in dealing with Asian partners as he wants Japan, South Korea and Taiwan to back up the massive project.

"From the perspective of energy security and supply stability... we would like to consider Alaska as one of the promising suppliers, among various other options," Naohiro Maekawa, a JERA executive, told a briefing on Monday.

Trump has hit Japan with 24% tariffs on its exports to the U.S., but, like most of his levies, they have been paused until early July to allow room for negotiations. A 10% universal rate remains in place, as does a 25% duty on cars, a mainstay of Japan’s export-heavy economy.

Japan’s trade negotiator Ryosei Akazawa is set to hold another round of tariff negotiations with U.S. officials later this week.

JERA is the biggest LNG buyer in Japan with annual volumes, used both for domestic and trading needs, at around 35 million metric tons. Japan is the world’s second biggest LNG buyer after China with Australia as its top supplier.

Japanese trading house Mitsubishi Corp may consider investing in Alaska LNG, though any decision will require careful review, its chief executive said earlier this month.

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A source familiar with the matter told Reuters last week that Trump’s energy security council plans to host a summit in Alaska in early June, when it hopes Japan and South Korea will announce commitments to the Alaska LNG project.

While Alaska can be considered as an option for diversifying LNG supply sources thanks to its relative proximity to Japan, companies remain cautious of making hard commitments amid high construction costs and lack of specific project details, according to two Japanese industry sources.

PROFIT HALVES

On Monday, JERA said its annual net profit halved, hurt in part by a weaker performance from its overseas power generation and renewable energy business.

Net income for the year ended March came in at 184 billion yen ($1.3 billion) but the company expects profit to rebound in the current year to 230 billion yen.

JERA, a joint venture between Tokyo Electric Power and Chubu Electric Power, has around 30 projects in its overseas power generation portfolio in more than 10 countries. They total about 13 gigawatt (GW) in capacity, compared to some 59 GW for domestic power generation.

Profits from its overseas power generation and renewable energy business tumbled 25.4 billion yen to 8.3 billion yen, it said. Aside from Japan, JERA has renewable energy projects elsewhere, including in the U.S., Belgium, Taiwan and the UK.

($1 = 143.7700 yen)

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