TOKYO, April 15 (Reuters) - Tokyo Electric Power Co (Tepco) and Chubu Electric Power Co on Wednesday named their 50-50 thermal fuel venture that will start operations at the end of this month Jera Co Inc and said fuel transport and trading businesses would be integrated from October.
The alliance will combine their upstream energy and fuel procurement businesses by around the summer of 2016, which would boost annual LNG purchases to nearly 40 million tonnes, on a par with the biggest buyer, state-run Korea Gas Corp (KOGAS).
The venture is also likely to give Asian buyers more muscle to press producers for more flexible contracts at a time of depressed prices.
The companies, the biggest and third-biggest of Japan’s 10 regional power utilities, are to decide by spring 2017 whether to integrate all their fossil-fuel stations. If they do, the venture would oversee 74 gigawatt of capacity globally, making it one of the world’s largest power generators.
The presidents of both companies expressed hope this would happen.
“To move things forward, if we can combine our ships, terminals and (fossil plants), the bigger the merits,” Tepco President Naomi Hirose told reporters.
The alliance’s name, Jera Co, is a play on the words Japan, energy and new era.
The rigid boundaries between Japan’s regional monopolies are gradually breaking down in the wake of the Fukushima nuclear crisis. The disaster exposed flaws in the national grid, pushed up prices and led three of them, including Tepco, owner of the Fukushima plant, to turn to the government for aid.
Tepco was saved from bankruptcy by the government in 2012 following the reactor meltdowns at Fukushima, north of Tokyo, after an earthquake and tsunami in March 2011. That was the world’s worst nuclear disaster since Chernobyl in 1986.
Fukushima exposed Tepco to tens of billions of dollars in compensation claims and clean-up costs and led to the shutdown of all of Japan’s nuclear reactors for stringent safety checks.
That forced operators to import record amounts of coal and expensive LNG for power generation, contributing to a record run of trade deficits for Japan and forcing two other regional monopolies to seek state aid.
Tepco, the world’s second-biggest LNG buyer, currently buys about 25 million tonnes a year. Chubu Electric, the third-biggest, takes in around 14 million tonnes. (Reporting by Osamu Tsukimori and Aaron Sheldrick; Editing by Alan Raybould)