Japanese Firms Hunting for LNG

Tuesday, May 1, 2012 @ 08:05 PM gHale

Japan’s Mitsui & Co. and Mitsubishi Corp. will pay $2 billion to jointly buy a 14.7 percent stake in an Australian LNG project from Woodside Petroleum.

Japan, the world’s largest liquefied natural gas (LNG) importer, is racing to secure gas supplies as LNG substitutes lost nuclear capacity. Its last working nuclear power station goes offline on Saturday.

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The country’s nuclear capacity, which previously accounted for about a third of the country’s electricity production, has slowly been taken offline since the Fukushima nuclear crisis last year triggered nuclear safety concerns.

The crisis forced Japan to import 18 percent more LNG mostly for power generation in the past year and prompted the government to scrap a 2010 plan to increase the share of nuclear energy in power generation to over 50 percent by 2030.

Japan is set to announce a new energy policy this summer. The country’s last operating reactor shuts for maintenance on Saturday and there is no schedule yet for restarting units idled for regular checks or closed after last year’s earthquake and tsunami.

Japanese firms have stakes in at least five other Australian LNG projects, and are eyeing the stake sale in BG’s Curtis gas project.

Australia has $200 billion of proposed LNG export projects with plans to add more than 80 million metric tons per annum (mtpa) of LNG production before the end of the decade to become the world’s leading LNG exporter, surpassing Qatar.

The Japanese companies agreed to buy the Woodside stake through a company called Japan Australia LNG (MIMI Browse) Pty Ltd that would give them a 16 percent interest in Woodside’s East Browse and 8.1 percent in West Browse ventures.

They also agreed to take 1.5 million metric tons of gas a year from the project, and offered Woodside help with getting competitive financing from Japanese banks for the Browse project, estimated by analysts to cost around $31 billion.

Woodside said its stake in the project will fall to 31.3 percent from 46 percent. It will remain the operator of the project.

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