Petronas Adds Hokuriku to Japan LNG Book as Ammonia Co-firing Falls Behind Schedule
Japan's utilities are signing fresh LNG term deals while the ammonia co-firing alternative faces a supply gap that pushes the coal exit well past current policy targets.
Petronas signed an initial agreement on Wednesday (2026-07-30) to continue supplying LNG to Hokuriku Electric Power, making the regional Japanese utility the latest customer to secure term supply from Malaysia's national producer, Rigzone reported. Petronas shipped 36.62 million metric tons of LNG in its most recent annual reporting period, according to the company's annual report.6
The deal adds another strand to Japan's accelerating LNG procurement drive. Tokyo's utilities have been pressing for medium-term supply security since Russia's invasion of Ukraine exposed spot-market dependence as a vulnerability, and Petronas, with a large and flexible portfolio, has become a preferred counterparty for both regional and national Japanese utilities.6
JERA, the world's largest LNG buyer, has been restructuring its commercial operations in parallel. On Wednesday (2026-07-01), it announced a wholly-owned subsidiary to manage LNG, upstream, low-carbon fuels, and shipping, the company said. JERA already runs a 2-million-ton-per-year Petronas supply agreement and has outlined plans to triple its US LNG purchases alone to as much as 5.5 million tons annually.3
On Monday (2026-07-14), JERA and South Korea's Samsung C&T signed a memorandum of understanding to explore hydrogen and ammonia value chains across both countries, Asian Power reported. The MoU reflects Tokyo's parallel strategy of using ammonia co-firing at existing coal plants to reduce emissions without retiring capacity.5
The numbers behind that strategy are daunting. Achieving 20% ammonia co-firing across Japan's utility coal fleet would require roughly 20 million metric tons of ammonia per year, Asian Power reported, a volume with no credible supply chain behind it. Costs remain well above what blending economics can absorb without subsidy, and the import terminals, storage, and specialised handling infrastructure needed to receive fuel-grade ammonia are being assembled from near-zero.4
JERA's primary supply response is the Blue Point Project, a $4 billion ammonia facility in development at CF Industries' Ascension Parish complex in Louisiana. The joint venture with CF Industries and Mitsui & Co carries a nameplate capacity of 1.4 million metric tons per year and a targeted production start of 2029, as the partners announced on April 8, 2025. To move the output, JERA has contracted four ammonia tankers from Mitsui OSK Lines and NYK Group on time-charter agreements.2
Blue Point's 1.4 million tons per year is roughly 7% of what full co-firing would require. Newcastle thermal coal traded at $120.10 per tonne on Monday (2026-08-03), and ammonia carries a substantial cost premium over coal-equivalent energy. Without sustained government support, co-firing at scale does not work economically. But even with support, the volume problem remains.2,4
Tokyo has formalised that support through the Long-Term Decarbonized Power Auction, under which coal- and LNG-fired plants qualify for capacity payments. LNG-related projects secured 10.1 GW of contracted capacity across the first three LTDA rounds, Japan NRG reported. The auction design keeps fossil-fuel capacity in service for the duration of the ammonia ramp-up, which on current project timelines extends to at least 2029.1
ICE EUA Dec-rolling stood at €80.75 per tonne of CO2 as of Sunday (2026-08-02), with five tracked signals pointing in a bearish direction. Japan's extended reliance on coal and LNG, embedded in LTDA policy and constrained by shallow ammonia supply chains, means Japanese utilities will remain significant LNG buyers for longer than their stated decarbonisation targets imply, sustaining competition for Atlantic Basin cargoes with European buyers during periods of tighter supply.1,6
No announced supply project closes that 20-million-tonne gap before 2029. Blue Point at 1.4 million metric tons per year leaves Japan's co-firing programme with a shortfall that no stack of bilateral MoUs yet resolves. Hokuriku signing an LNG deal with Petronas tells the same story more plainly: when ammonia timelines extend, utilities buy gas.2,4,6