* Jera can freely set supply volumes to Europe markets
* Jera obtains great flexibility in changing LNG market
* Jera to supply up to 1.5 mln tonnes LNG over 2-1/2 years (Adds details)
By Osamu Tsukimori
TOKYO, May 26 (Reuters) - Japan’s Jera Co said on Thursday it had signed a contract to supply liquefied natural gas (LNG) to EDF Trading in Europe, marking the first deal where it can adjust sales volumes to match its own needs.
Jera, a venture of Tokyo Electric Power and Chubu Electric Power, said it would sell up to 1.5 million tonnes of LNG to terminals in Europe including France and Britain between June 2018 and December 2020 under a deal with the London-based subsidiary of EDF.
Jera will surpass Korea Gas Corp as the world’s single biggest buyer of LNG with annual purchases of around 40 million tonnes once it fully integrates its parents’ existing fuel procurement contracts from July.
The joint venture was set up to buy fuel for power stations.
Jera’s Vice President Hiroki Sato said the EDF deal would give it more flexibility in an uncertain market and that its first overseas LNG sales would be a stepping stone for its global trading business.
“This is a contract that’s very convenient to Jera,” he said. He did not comment on the minimum volumes that Jera has to supply EDF Trading during the contract period or give financial terms.
The deal is an example of the increased flexibility in the LNG market that Japan, the world’s biggest importer of the fuel, has long been calling for after the Fukushima nuclear disaster in 2011 led to the shutdown of reactors and a surge in imports.
When its own LNG demand is robust, Jera can lower supply volumes to EDF Trading and keep more of its purchases for its own use, Sato said. Conversely, when its own LNG needs are low, it can supply more to EDF Trading.
Jera’s parent firms consumed more than 33 million tonnes of LNG for power generation in the year to the end of March, according to trade ministry data.
Jera’s first LNG supplies to Europe would become possible because of access to cargoes from the U.S. Freeport LNG project in Texas which is set to start commercial operations in 2018.
Chubu, along with Osaka Gas, is contracted to take all of the output from Freeport LNG’s first train, which will have a capacity of about 4.4 million tonnes a year.
Reporting by Osamu Tsukimori; Editing by Keith Weir