JERA–Woodside LNG pact bolstering Japan’s winter energy resilience

Japan’s JERA, an equal joint venture of two major Japanese electric power companies, TEPCO Fuel & Power Incorporated and Chubu Electric Power Company, has signed a non-binding heads of agreement (HoA) with the Singaporean subsidiary of Australian energy giant Woodside for the purchase of liquefied natural gas (LNG) from the latter’s portfolio.

The HoA envisages JERA’s purchase of three cargoes, or approximately 0.2 million tonnes per annum (mtpa) of LNG on a delivered ex-ship (DES) basis. This will be provided during Japan’s peak winter period, from December to February, starting in 2027 for a minimum of five years.

If the deal is formalized, it will entail supply from the Scarborough gas field in Australia, a project supported by a loan from the Japan Bank for International Cooperation (JBIC). The $1 billion loan agreement was signed last May.

Woodside Chief Commercial Officer (CCO), Mark Abbotsford, said: “This agreement not only strengthens our relationship with JERA but also reinforces the critical role Woodside plays in supporting Japan’s energy security through the reliable supply of LNG. We look forward to further collaboration with Japanese partners as we progress towards the startup of our new LNG projects, including the Scarborough Energy Project, where first cargo is targeted for the second half of 2026.” 

JERA believes gas-fired power generation plays a critical role in meeting peak energy demand and balancing seasonal fluctuations, especially in an era of growing adoption of renewables. Since LNG is seen as a key fuel for thermal power generation, securing a reliable and flexible supply is thought to be increasingly important.

“It is critically important for JERA to secure LNG for the high-demand winter season. We are grateful for Woodside’s kind understanding and cooperation to reach this agreement, which will contribute to enhancing Japan’s energy security. We look forward to further developing our relationship with Woodside, our reliable partner,” noted JERA’s Chief Low Carbon Fuel Officer, Ryosuke Tsugaru.

The deal with Woodside follows JERA’s LNG supply deals with four U.S. players announced earlier this month. These entail sales and purchase agreements (SPAs) with NextDecade Corporation and Commonwealth LNG, and HoAs with Sempra Infrastructure and Cheniere Marketing.

The Scarborough energy project comprises the Scarborough gas field, construction of Pluto Train 2, modifications to the existing Pluto Train 1, and the integrated remote operations center (IROC) being built in Perth. 

The Scarborough field is located in the Carnarvon Basin, approximately 375 kilometers off the coast of Western Australia. The field will be developed through new offshore facilities connected by an approximately 430-kilometer pipeline to a second LNG train (Pluto Train 2) at the existing Pluto LNG onshore facility.

Woodside is the operator of the Scarborough project and has a 74.9% participating interest in the Scarborough field. LNG Japan holds a 10% and JERA a 15.1% interest in the Scarborough joint venture (JV), with the latter coming onboard in October 2024.

The project will include the installation of a floating production unit (FPU) with eight wells drilled in the initial phase and 13 wells drilled over the life of the Scarborough gas field. Approximately 5 mtpa of Scarborough gas will be processed through Pluto Train 2, with up to 3 mtpa processed through the existing Pluto Train 1.

When the completion of fabrication, construction, and offshore floatover of the Scarborough FPU topside and hull structures by McDermott was disclosed a month ago, the project was said to be over 82% complete.