Japan Plans Major LNG Investment

US$10 billion in Global Infrastructure

Authorities in Japan have announced plans to invest US$10 billion in global LNG infrastructure, doubling the country’s commitment to boost energy supply chains.

The proposed investment is expected to spur breakbulk activity worldwide in the LNG sector and support several major new LNG projects.

“On top of Japan’s commitment two years ago of investing or financing more than $10 billion in energy supply chains, we are making a fresh commitment of additional and collective US$10 billion funding from both public and private sectors,” said Isshu Sugawara, Minister of Economy, Trade and Industry, or METI.

New and Developing Markets

The move has been broadly welcomed by industry analysts, with many predicting it will greatly reduce barriers for new development.

“This is an evolution from the spending plan from two years ago which was focused on encouraging new supply sources and has been largely realised through Japanese investments,” said Nicholas Browne, research director at consultancy Wood Mackenzie, adding that it would likely lead to development of infrastructure “in new and developing markets in the India sub-continent and Southeast Asia, reflecting a shift in priorities.”

Energy Diversification

apan is already the world’s largest LNG buyer and this investment promises to diversify its reliance on energy from the Middle East as tensions grow in the region.

"For Japan, it serves the purpose of growing the global Asian LNG market, and improving liquidity and flexibility. Meanwhile, Japanese companies may also be beneficiaries given their strength in regasification terminal development, gas to power and gas infrastructure,’ Browne said.

Japan’s METI also announced plans to train 500 LNG specialists in areas such as LNG reception technology and environmental regulations.

“By making these commitments to help develop the global LNG market, Japan will work hard to reinforce global energy security,” Sugawara added.

New financing is expected to include public-sector financing from the Japan Bank for International Cooperation as well as from the state-backed Japan Oil, Gas and Metals National Corp. Trading houses, banks and commercial investors will also participate with  coverage for LNG-related financing provided by government-owned Nippon Export and Investment Insurance.

"Given the challenging credit rating of many of these markets, having this financing underwritten should reduce the financing costs and help LNG compete with other fuels like coal,” Browne concluded.
Photo: Isshu Sugawara, Minister of Economy, Trade and Industry. Credit: Wikimedia