Remarks at First Half of FY2025 Regular Press Conference2025/06/27

JERA Co., Inc. (“JERA”) held a regular press conference by Yukio Kani, Global CEO and Chair and Hisahide Okuda, President, Director, CEO and COO on Friday 27 June.

*This Press Conference was held in Japanese. This is a translation version and Japanese version overrides in case of any discrepancy.

1.Press Conference Overview

Themes:   
•    Reallocating Investments to Strengthen LNG in Response to Changing Business Environment and Reflection on JERA’ Growth Strategy 
•    Realization of GX development integrated with regional revitalization and industrial value enhancement

2.    Summary of Remarks

■ Yukio Kani, Global CEO & Chair
Let me begin by providing an overview of our key initiatives over the past year, based on the growth strategy we announced in May last year.

P3: Reflecting on the Growth Strategy Announced in May 2024
In our growth strategy, we outlined our commitment to achieving JERA’s mission through investment in three core areas: LNG, renewable energy, and hydrogen/ammonia. We also presented our financial targets toward FY2035. In addition, we explained that the allocation of investments across these three areas would be adjusted agilely in response to changes in the business environment.

P4: Reallocating Investments to Strengthen LNG in Response to Changing Business Environment
Indeed, over the past year or two, the business environment has undergone significant change. Rising costs across nearly every sector have had a major impact on how we allocate investments. Sectors that were already high-cost have become even more expensive in relative terms. For example, the cost differential between hydrogen/ammonia and LNG has widened substantially, making hydrogen/ammonia significantly more expensive on an absolute supply cost basis. This background has contributed to a global reassessment of the value of LNG.
Given this context, over the past few years, we have placed greater focus on LNG. At the same time, in pursuing decarbonization and our net-zero goals, we remain committed to making renewable energy and hydrogen/ammonia sustainable businesses. This will require stricter investment discipline and continued efforts to diversify risks through collaboration with other companies.
With that, I’d like to briefly walk you through developments in each of the three areas over the past year in the following slides.

P5: Achieving Step 3 in Renewable Energy, Aiming for a Leap Forward Over the Mid-to Long-Term
In last year’s growth strategy, we introduced a three-step roadmap for expanding our renewable energy business. The first two steps focused on building an attractive business platform, with Step 3 exploring possibilities for capital partnerships.
In fact, right after the strategy was announced in May 2024, I met with bp CEO Murray Auchincloss in London, and discussions led to the launch of integration talks. By December, we reached an agreement to establish a 50:50 joint venture, JERA Nex bp, which is expected to officially launch around September. It is set to become one of the world’s top five offshore wind companies.
Rather than pursuing a 100% in-house approach under a challenging market environment, we are scaling up through collaboration with other companies—diversifying our investment portfolio and combining complementary capabilities to manage risk and enforce discipline.

P6: Building and Strengthening Capabilities Across the Hydrogen & Ammonia Value Chain, from Upstream to Downstream
Hydrogen and ammonia are most affected by cost inflation. For now, we are focusing on completing our first blue ammonia introduction project. Last year, we successfully conducted a demonstration of 20% ammonia substitution at the Hekinan Thermal Power Station, and are accelerating construction toward commercial operation.
On the upstream side, in April of this year, we decided to invest in what will become the world’s largest blue ammonia production project in Louisiana, USA.
By building out each component of the value chain, we’re laying the groundwork to scale up investment quickly once market conditions improve.
At the same time, we are also preparing to launch CCS (carbon capture and storage) projects in the Tokyo Bay area as a new decarbonization solution.

P7: Reassessing LNG Procurement Strategy: Securing Up to 5.5 Million Tons Annually from the U.S.
Over the past year, there has been a global reassessment of LNG. One notable example is data centers, where stable 24/7 power supply is essential. In regions without pipeline gas, such as Japan, LNG is virtually the only viable solution.
In the near term, we expect supply growth to ease market tightness, but by the 2030s, significant uncontracted LNG demand will emerge, particularly among Asian buyers who have yet to commit to long-term contracts.
On the supply side, most new LNG supply due around 2030 is now in late-stage negotiations, mainly from the U.S. and Qatar. However, even U.S. Gulf Coast projects, which liquefy shale gas, are facing cost pressures, reducing their competitive surplus.
Against this backdrop, after more than a year of consideration and negotiation, we announced this month our decision to procure up to 5.5 million tons of U.S. LNG under new long-term agreements.

P8: Ongoing Priority: Ensuring Competitiveness and Flexibility While Maintaining Stable Supply at the kW・kWh Level
JERA remains strongly committed to ensuring stable energy supply to Japan, but doing so requires adapting to the changing domestic power market.
Japan sees peak demand in summer and winter, and off-peak periods in spring and autumn. Historically, if we say the peak demand is 10, spring/autumn LNG demand was 10:8, but this has now declined to 10:5, and is projected to fall further to 10:3 within five years.
Long-term LNG contracts span 15–20 years, with steady monthly deliveries—creating a mismatch with increasingly variable demand.
To address this, JERA has spent over two decades building a flexible LNG value chain: securing FOB (free on board) contracts, enhancing our LNG fleet, building global trading capabilities, and improving operational flexibility at domestic thermal plants.
The recently signed U.S. contracts are FOB-based, meaning we can direct cargoes freely. This is a key move to strengthen our value chain and adapt to evolving demand.

■Hisahide Okuda, President, Director, CEO & COO
As Mr. Kani explained, we are currently placing emphasis on LNG in the short term. However, this does not mean that decarbonization is no longer a priority. It remains a challenge that must be addressed in the medium term.
I would now like to discuss how JERA will contribute to embedding decarbonization and GX (Green Transformation) into Japanese society.

P10: Co-Creating Decarbonization Solutions: GX Development x Regional Revitalization and New Industrial Structures
Decarbonization is globally recognized as a costly endeavor. In Japan, we believe the most viable approach is to advance decarbonization in parallel with the creation of high-value-added industry. This means creating a socio-economic structure where “high-quality products are properly valued and sold at premium prices.”
To achieve this, JERA will pursue two major initiatives, as shown in the slide:
1.    GX development integrated with regional revitalization — targeting areas like Akita and Aomori where we are developing offshore wind. By expanding local industrial benefits and enabling local production and consumption of renewable power, we aim to create sustainable regional GX models.
2.    GX development aligned with high-value industrial transformation — focusing on industrial complexes. We will develop large-scale hydrogen/ammonia import hubs, support local industry in utilizing these fuels, and co-develop high-value products that can command higher prices in the global market.

P11: Enhancing Regional Industries Through Local Renewable Energy Use
This model of GX integrated with regional revitalization will unfold in two steps:
•    Step 1: Establish mechanisms to ensure local industries benefit from their own products. For instance, regions like Akita and Aomori already produce high-value agricultural and marine products—like sake—that are sold for 5,000 yen in Japan but fetch 500,000 yen overseas. Most of that margin currently goes to overseas retailers. We aim to return this value to local producers by helping them reach premium global customers directly.
•    Step 2: By supplying clean, locally produced offshore wind energy, we enable further value enhancement of local products—creating a virtuous cycle of growth.

P12: Creating Value Through a New Industrial Linkage Model Using Clean Fuels
This GX model for industrial transformation starts by having industrial complex to use our planned hydrogen/ammonia hubs.
Traditionally, petrochemical complex has operated with oil as the starting point. We envision adding a parallel supply chain based on hydrogen and ammonia, which can enable the production of higher-value final products.
There is also strong interest in ammonia as a marine fuel. Many ships operate around industrial ports, and we will explore detailed plans for ammonia bunkering in such areas.

P13: Toward a Prosperous Society Rooted in the Green Transformation (GX)
Through these collaborative initiatives, we aim to embed GX into society. However, that alone is not sufficient. As mentioned in our previous press conference, we also need to shift from selling electricity by volume to selling it by value. Electricity from LNG, hydrogen/ammonia, and renewables all have different attributes and values. We must communicate these differences clearly and assign appropriate price tags to each. By combining this value-based pricing approach with regional revitalization and industrial enhancement, we believe GX can take root across Japan.
Today’s discussion may have been abstract but consider it a preview. In the coming months, we will announce specific initiatives, and we hope you’ll recall how each of them ties into the broader narrative we shared today.