Japanese trader JERA is moving away from a project-based LNG shipping portfolio and expects to grow its fleet as its business expands.

Speaking to TradeWinds, Yuichiro Kato, JERA executive officer and head of the LNG transactions group in business development department where he is responsible for LNG shipping, said the company had been operating its LNG vessels between each dedicated project and terminals in Japan.

“But as we grew our fleet and commenced LNG trading in Singapore, we have started to operate our vessels in a more flexible manner, and not all vessels are assigned to specific projects anymore,” he revealed.

LNG optimisation

Kato said JERA is moving to grow its free-on-board (FOB) LNG portfolio and is expected to need more shipping capacity.

He added the company had started its LNG optimisation operations in April as part of its new business plan to 2025.

The plan was published after the integration of domestic thermal power plants and the terminals of Tokyo Electric Power Co and Chubu Electric Power Co that left JERA responsible for nearly half of Japan’s thermal power plant capacity.

“We are still examining the outcomes of these activities, as well as commitments into new LNG transactions projects that require additional shipping capacities,” Kato said.

He said the company’s likely fleet increase will depend on its operation capabilities and commitments to new LNG projects.

In the long term, JERA plans to increase its current LNG fleet of 18 to 25 vessels by 2025 in association with an increased ratio of FOB contracts

Yuichiro Kato

But he added: “However, in the long term, JERA plans to increase its current LNG fleet of 18 to 25 vessels by 2025 in association with an increased ratio of FOB contracts.”

Upbeat outlook

Speaking about the company’s recent 12-year charter deals with Maran Gas Maritime and GasLog for two LNG newbuildings, Kato said JERA requested proposals from both Japanese and overseas owners for the vessels it needs to lift its volumes from Freeport LNG in the US.

“We were finally able to conclude agreements with two foreign owners that offered competitive vessels in 2020 when we required them,” he said.

Kato added that JERA has no preference on the nationality of the shipowners but is looking to work with those that have abundant experience in the LNG sector and are able to provide the best rates.

When asked about the company’s view on the LNG shipping market, he said: “We foresee an upward trend for the charter rates but expect periodical volatilities.”

He did not elaborate further.

Dividend earnings

Kato said that in future, the option of owning ships will remain “on the table” for JERA “as long as that will contribute to better charter rates and we can expect adequate dividend earnings”.

JERA currently operates 18 LNG carriers, four of which are under construction as of 1 June, and has ownership stakes in 10 of these vessels.

JERA's fleet

Ship nameCapacity (cbm)BuiltYardJERA ownership
Pacific Notus135,0002003MHI70%
Pacific Eurus135,0002006MHI70%
Alto Acrux145,0002008MHI0%
Cygnus Passage145,0002009MHI70%
Pacific Enlighten145,0002009MHI30%
Pacific Arcadia145,0002014MHI0%
Pacific Mimosa155,0002018MHI0%
LNG Pioneer138,0002005DSME0%
Seishu Maru155,0002014MHI40%
Esshu Maru155,0002014MHI40%
Bishu Maru165,0002017KHI0%
Enshu Maru165,0002018KHI0%
Nohshu Maru180,0002019MHI50%
Shinshu Maru177,0002019KHI50%
Bishu Maru180,0002019 deliveryMHI50%
To be named177,0002019 deliveryKHI50%
To be named173,4002019 deliveryDSME0%
To be named180,000SHI0%