An extended conflict involving Iran and its adversaries could drive global energy buyers toward North American suppliers like the United States and Canada, according to a senior official at Japan’s largest electricity producer JERA, as warfare spreads to critical energy facilities throughout the Middle East.
“With 90 million metric tons from the Middle East absent from the global LNG market, the longer this persists, the greater the impact,” Senior Managing Executive Officer Ryosuke Tsugaru stated during a Wednesday interview.
On the same day, Qatar – which ranks as the world’s second-biggest liquefied natural gas exporter – reported that Iranian missiles struck Ras Laffan, home to its primary LNG processing facilities, resulting in “extensive damage.”
JERA chose not to provide comments about the attack when contacted Thursday.
Tsugaru explained during Wednesday’s interview that continued fighting will likely drive spot prices sharply higher while increasing market volatility, and the crisis highlights regional dangers that may encourage sourcing or investment in alternative locations.
Japan’s top LNG purchaser manages approximately 35 million tons of the super-cooled fuel each year, with roughly 27 million tons consumed within Japan’s borders.
Around 5% of JERA’s Japanese deliveries travel through the Strait of Hormuz, where the three-week conflict has created shipping disruptions. This waterway borders Iran and handles approximately 20% of worldwide fossil fuel transportation.
Earlier this month, Qatar suspended operations at its 77 million ton-per-year LNG facility and announced force majeure on deliveries. The installation is located across the Persian Gulf from Iran, which has been attacking American interests and energy infrastructure.
In February, JERA finalized a 27-year agreement with QatarEnergy for 3 million tons annually from the North Field South project, part of a major expansion program’s second phase. Should warfare continue and expansion work face delays, JERA’s deliveries might be pushed back beyond their planned 2028 timeline, Tsugaru noted.
“Our exposure to the Middle East is not significant … but we are considering additional spot purchases to address certain cargo shortfalls,” Tsugaru explained, mentioning that JERA has received no emergency supply requests from domestic utility companies.
During an extended crisis, JERA would monitor demand patterns and purchase spot cargo when necessary to maintain reliable supply, he said. Nevertheless, JERA – a partnership between Tokyo Electric Power and Chubu Electric Power – has no intentions of modifying its QatarEnergy contract.
Last year, JERA committed to purchasing 5.5 million tons annually of American LNG from four facilities beginning around 2030, along with acquiring U.S. natural gas assets worth $1.5 billion. The company has obtained necessary LNG supplies for the early 2030s and can protect roughly 60% of anticipated U.S. volumes – expected to reach 10 million tons within the next decade – against price fluctuations, Tsugaru said.
JERA does not seek to become a U.S. gas producer and is not currently pursuing additional upstream purchases, he stated.
The company also obtains supplies from LNG Canada, a Shell-operated project, and might explore additional sourcing from an LNG Canada expansion initiative, Tsugaru added.
