Japan’s top power generation company, JERA, has signed an initial agreement to purchase liquified natural gas from a major pipeline project in Alaska. The move follows Tokyo’s commitment to increase US energy purchases as part of a recent trade deal. JERA signed a letter of intent with US project developer Glenfarne to advance discussions on liquefied natural gas offtake from the Alaska LNG Project. The proposed agreement outlines the sale of one million tonnes per annum of liquified natural gas over a 20-year term.

The Alaska LNG Project, a 1,300-kilometre pipeline, aims to produce LNG for shipment to Asia. Although the project has been stalled due to technical obstacles, it is expected to become operational by 2030 at the earliest. The project’s development is a key aspect of the Japan-US trade deal, which includes Tokyo’s commitment to stable and long-term incremental purchases of US energy.

Glenfarne is targeting a final investment decision for the Alaska LNG pipeline later this year and plans to finalize commitments to export the gas by 2026. US Energy Secretary Chris Wright has welcomed the announcement, stating that it is an important step forward for the project.

Japan’s efforts to diversify its energy procurement are driven by its dependence on oil imports from the Middle East. The country’s government views the potential increase in US-produced LNG supply as a means to diversify its energy sources and stabilize the supply of necessary resources. Japanese government spokesman Yoshimasa Hayashi noted that the development has the potential to benefit the country, particularly in securing and stabilizing its energy supply.

The Alaska LNG Project is a significant undertaking, with an estimated cost of $44 billion. While it still faces various challenges, the agreement between JERA and Glenfarne marks a crucial step towards its development. As the project progresses, it is likely to have a substantial impact on the global energy market, particularly in Asia, where demand for LNG is increasing. With Japan’s commitment to purchasing US energy, the project is poised to play a key role in strengthening energy ties between the two countries.