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JERA to Invest in Freeport LNG Development

Published by , Senior Editor
Hydrocarbon Engineering,

JERA Co. Inc. has decided to invest, through its subsidiary JERA Americas Inc., in Freeport LNG Development L.P. (FLNG), which operates the Freeport LNG project in the US, 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 US$2.5 billion acquisition is expected to be completed after the necessary approval and authorisation 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 million tpy) 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 decarbonisation and a stable energy supply to support economic growth. Gas-fired power generation 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.

In a statement, JERA said that 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.

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