JERA CEO warns LNG prices may climb further amid supply fears

JERA, Japan's largest importer of liquefied natural gas and its biggest power producer, anticipates that LNG prices will continue to rise due to ongoing shipping challenges and low storage levels in Europe. Yukio Kani, chairman and global chief executive officer of JERA, stated in a Bloomberg TV interview on Friday that the company does not expect Qatari LNG to return to the market soon. This comes as state-owned QatarEnergy has extended its force majeure on LNG deliveries to Asia and Europe for an additional month, through the end of November. The disruption is attributed to blocked cargo traffic through the Strait of Hormuz amid the protracted U.S.-Iran stalemate. The lack of Qatari supply has already driven Asian spot LNG prices and Europe's benchmark natural gas prices to their highest levels since the 2022-2023 crisis. Kani also noted that historically low gas levels in European storage sites and the EU's ban on Russian LNG, effective January 2027, will likely contribute to further price increases. The ongoing conflict involving Iran has significantly altered the near-term outlook for LNG prices in both Asia and Europe. European nations are facing supply pressures ahead of winter, while price-sensitive Asian buyers are seeking alternatives, including increased coal consumption and renewable energy targets, to mitigate potential supply shortages and high import costs. As of October 1, gas storage facilities in the EU were at 71% capacity, according to Gas Infrastructure Europe, which is lower than the 86% average for this period over the past five years. Some major European economies, such as Germany, have even lower storage levels, with its sites only about 58% full, raising concerns about supply security if the upcoming winter is colder than usual.