(Bloomberg) -- The world’s biggest buyer of liquefied natural gas said there’s a risk of more market volatility this year. 

Spot LNG prices have tumbled from last year’s record high, but that’s largely because of good luck last winter, said Yukio Kani, chairman and global chief executive officer of Jera Co. Warmer-than-expected weather and China’s pandemic restrictions reduced demand for the fuel, he said in an interview in Tokyo.

This winter, with import capacity in Europe rising and China potentially increasing demand after it ended pandemic restrictions, prices could spike again if severe weather strikes, he said. There’s no opportunity for buyers to “let their guards down,” Kani said.

See also: EU Prepares to Import More LNG With Boost in Capacity Next Year 

Jera, a venture between Tokyo Electric Power Co. Holdings Inc. and Chubu Electric Power Co., announced on Friday that it agreed to a 20-year deal to buy LNG from Venture Global LNG Inc.’s proposed terminal in Louisiana. While the company expects Japanese LNG demand to decline over the next decade, it could surprise by staying flat as more data centers and semiconductor factories are built, Kani said. 

“Those two facilities guzzle electricity, making it hard to read the demand outlook,” he said.

Jera is also working to support Japan’s plans to use ammonia and hydrogen to decarbonize existing thermal power plants. The strategy has gotten pushback from other countries, most recently at the Group of Seven energy and environment ministers meeting. 

Using ammonia for electricity generation can create substantial demand that would justify investments in the supply chain, similar to how Japan helped birth the LNG industry 50 years ago, Kani said.

--With assistance from Takaaki Iwabu.

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