JERA Co., Japan’s largest power generator, committed to buying 1 million metric tons of liquefied natural gas annually for two decades from Glenfarne Group’s contentious Alaska LNG project, marking another step toward energy diversification despite lingering questions about the venture’s economics.
The letter of intent, announced Wednesday, advances the $44 billion Alaska project that has attracted doubts because of its high costs. The deal comes as JERA accelerates efforts to secure flexible LNG supplies amid surging electricity demand, driven partly by data center expansion.
Some Japanese officials and energy executives have raised concerns that the project’s projected costs could make its gas less competitive than that from other sources. Reuters reported earlier that Japan had hired consultancy Wood Mackenzie to review the proposed 800-mile Alaska gas pipeline and LNG plant, signaling that Tokyo is considering deeper involvement in the project.
The Alaska commitment represents a relatively modest addition to JERA’s expanding LNG portfolio. The company recently finalized agreements to procure up to 5.5 million tonnes per year from other U.S. suppliers over 20 years, dwarfing the Alaska volumes.
Glenfarne is targeting a final investment decision for the Alaska LNG pipeline in late 2025 and a 2026 FID for the project’s LNG export components. The project has been proposed in various forms for decades but has struggled to secure binding contracts and investment commitments, raising questions about its commercial viability in an increasingly competitive global LNG market.
