Japan’s JERA to book $751 mln loss related to fire at Freeport LNG in FY22/23

TOKYO, Oct 28 (Reuters) – Japan’s biggest buyer of liquefied natural gas (LNG), JERA, said on Friday it plans to book a 110 billion yen ($751 million) loss related to a fire at US Freeport LNG, mostly due to higher costs as it is necessary to buy alternative fuel from the spot market.

Japan’s biggest power generator assumes it will not receive sufficient LNG from the US project in October-March, Tetsuo Yoshida, JERA’s general manager of financial management department, told a news conference.

Freeport LNG, operator of one of the largest US export plants producing LNG, said in August it aimed to return 85% of production from its fire-hit Texas plant by late November and achieve full operation by March. read more

“We were told Freeport LNG will resume partial operation from early- to mid-November, with all operation to be restored in the first half of next year,” Yoshida said.

“Most of the loss related to Freeport LNG is higher procurement cost of alternatives,” he said, adding some repair costs of the facilities would also be incurred.

Asked about a supply disruption at Malaysia LNG, JERA does not expect a major impact on its fuel procurement, Yoshida said, although he declined to provide details.

Malaysia’s Petronas has declared force majeure on gas supply to one of its liquefaction terminals, Malaysia LNG Dua, due to a leak caused by soil movement at the Sabah-Sarawak Gas Pipeline on Sept. 21. read more

For the April-September period, JERA, a joint venture between Tokyo Electric Power (9501.T) and Chubu Electric Power (9502.T), reported a net loss of 131.5 billion yen, marking its first red ink for the period since it began disclosing earnings in 2018.

For the year to March 31, it forecasts a net loss of 200 billion yen, blaming losses related to Freeport LNG and the larger impact of “time lag” before fuel price increases are reflected in electricity prices.

($1 = 146.5000 yen)

Reporting by Yuka Obayashi; Edited by Christopher Cushing and Stephen Coates

Our Standards: The Thomson Reuters Trust Principles.

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