JAPAN’S JERA ACQUIRES $2.5 BILLION INTERESTS IN FREEPORT LNG DEVELOPMENT
JERA decided to invest, through its subsidiary JERA Americas Inc., in Freeport LNG Development, which operates the Freeport LNG project in the United States, and has concluded a securities purchase agreement with infrastructure fund Global Infrastructure Partners to acquire the approximately 25.7% interest in FLNG held by its subsidiaries. The approximately 2.5 billion USD acquisition is expected to be completed after the necessary approval and authorization procedures. For this Transaction, JERA Americas Inc. appointed Goldman Sachs & Co. LLC as its exclusive financial advisor and Sidley Austin as its legal advisor.
JERA, together with FLNG, has contributed to the stable operation of Train 1 of the Freeport LNG project through its participation in FLIQ 1 Holdings, LLC. As a result of the Transaction, JERA will not only be involved in the entire existing Freeport LNG project (three trains with an annual production capacity of approximately 15.45 mtpa) but will also work with FLNG to advance new LNG projects including production capacity expansion and the development of Train 4.
In Asia, there is demand for both decarbonization and a stable energy supply to support economic growth. Gas-fired power generation—which emits less CO2 than power generation using other fossil fuels—can be a flexible supplement to intermittent renewable energy, and demand for it as an energy source indispensable to promoting the energy transition is expected to continue to grow. As evidenced by the current gas price hikes around the world, securing a stable supply of competitive LNG is becoming increasingly important.
FLNG’s new LNG projects have extremely low development risk due to the use of the existing Freeport LNG project, which enables the company to flexibly expand production capacity in response to increased global LNG demand. In addition, since there are no resale or destination restrictions on LNG exported from the project, JERA believes it will be possible to supply LNG to Japan when supply is tight and to otherwise respond flexibly to the LNG supply and demand situation in the Asian region.
By leveraging the knowledge and expertise it has accumulated through its global LNG value chain business and power plant operations, JERA will work together with FLNG on its various businesses—such as operation of the existing Freeport LNG project, development of new LNG projects, and flexible LNG transactions—as it strives to improve the competitiveness of the Freeport LNG project.
Under its “JERA Zero CO2 Emissions 2050” objective, JERA has been working to reduce CO2 emissions from its domestic and overseas businesses to zero by 2050, promoting the adoption of greener fuels, and pursuing thermal power that does not emit CO2 during power generation. JERA also plans to establish decarbonization roadmaps optimized for each country and region and to promote zero-emission initiatives that follow these roadmaps.
Leveraging its long experience in the LNG value chain businesses, JERA will follow the decarbonization roadmaps that are to be drawn up for each country and region as it strives to expand the adoption of LNG—an indispensable transitional fuel for achieving decarbonization—and to contribute to global decarbonization and energy solutions.
JERA is 50-50 joint venture between TEPCO Fuel & Power, a wholly owned subsidiary of Tokyo Electric Power Company, and Chubu Electric Power, founded in April 2015. The company is headquartered in Tokyo.
(Source: Jera – Image: Freeport LNG terminal on Quintana Island industrial estate/Texas Observer )