Japanese energy group JERA, one of the world's biggest importers of liquefied natural gas, has taken a step toward a possible expansion of its LNG business to China.
The 50-50 joint venture between Tokyo Electric Power Co. Holdings and Nagoya-based Chubu Electric Power recently established a unit in Beijing to conduct market research for LNG terminal construction and trading.
The move comes after China surpassed Japan as the world's top LNG importing nation. Chinese demand for energy is only expected to rise as its economy grows.
Several JERA employees have been assigned to the new unit. The company will consider geopolitical risks including the war in Ukraine as it makes a decision on a Chinese business.
China's LNG imports rose by one-fifth in 2021 to about 80 million tons, compared with Japan's roughly 75 million tons imported that year.
JERA is involved in everything from procurement and production of LNG to gas-fired power generation. The company handles 40 million tons of LNG a year and accounts for about 40% of Japan's annual imports of the fuel. Its hubs for LNG trading include Singapore.
A Chinese LNG business by JERA could help provide stability to Japan's energy supply. In one scenario, excess LNG stocks in China could be diverted to Japan to meet a shortfall.
Elsewhere in Asia, JERA will join in building one of Southeast Asia's largest natural gas-fired power plants and LNG offloading facilities in Vietnam.
