INTERVIEW-Japan’s Osaka Gas seeks U.S. shale gas stake

From REUTERS

By Osamu Tsukimori

TOKYO, April 15 (Reuters) – Osaka Gas Co is looking to buy a stake in at least one U.S. shale gas project to help supply fuel to the Freeport LNG project in Texas, a senior company official said on Tuesday.

Japanese gas and power utilities have been looking for ways to cut fuel costs after their liquefied natural gas (LNG) imports and payments rose to records last year due to the second complete shutdown of the country’s nuclear reactors since the 2011 Fukushima disaster.

One strategy has been to sign up for new LNG supplies from the United States, which is expected to grow to be the third largest exporter of the super-chilled gas by the end of 2020.

Osaka Gas and Chubu Electric, for instance, have signed 20-year tolling agreements with Freeport LNG for 2.2 million tonnes of LNG a year each from the project’s first liquefaction unit. They have also invested in the plant.

“We are not considering acquiring a gas stake to cover all volumes (for Freeport),” Motoyuki Hirabayashi, general manager of energy development, told Reuters in an interview.

“But we have received many offers from sellers wanting us to buy their gas stakes partly because Henry Hub prices have still not risen sharply.”

Some U.S. companies have halted development of shale gas projects amid uncertainties over profits as benchmark Henry Hub prices have dwindled with the U.S. shale gas boom, opting instead to sell their stakes, Osaka Gas officials said.

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