TOKYO -- The fuel supply joint venture between Tokyo Electric Power Co. Holdings and Chubu Electric Power will begin buying liquefied natural gas from the Wheatstone development project in Australia, diversifying its purchases amid tensions in the Middle East.
The fossil-fuel venture, known as Jera, gets more than 20% of its LNG from Qatar, its biggest supplier. But once operations at the Wheatstone project go into full swing in 2018, purchases from Australia will surpass those from the Middle Eastern nation. The Wheatstone site, located in northwestern Australia, is set to begin shipments as soon as this month.
Jera is among the world's top LNG purchasers, acquiring 35 million tons in fiscal 2016. Tepco and Chubu Electric handed over their long-term LNG contracts to the joint venture when it was established in 2015.
Shipping LNG from Australia typically takes about 10 days, roughly two-thirds of the time to ship from Qatar. In addition to lower shipping costs, the shorter distance means the Japanese venture will be able to adjust procurement flexibly depending on demand.
The Wheatstone project estimates annual capacity of 8.9 million tons, of which Jera will purchase 5.2 million tons to supply to Tepco and Chubu Electric. U.S.-based Chevron is leading the LNG enterprise. A 10% interest is held by PE Wheatstone, which is backed by Jera, Mitsubishi Corp., Nippon Yusen, and Japan Oil, Gas and Metals National Corp.
In June, Qatar's neighbors including Saudi Arabia severed ties with the nation. Although no major impact has been seen in LNG trading so far, the rise of such geopolitical risks is pushing companies to take preemptive measures.