The companies agreed to form a joint venture to carry out feasibility studies for the construction of LNG facilities, Takashi Tsukioka, Idemitsu’s executive vice president, told reporters in Tokyo today. Idemitsu and Calgary-based AltaGas aim to begin exports of 2 million tons a year of LNG as soon as 2017, after completing the studies by early 2014, Tsukioka said.
Idemitsu and AltaGas follow companies including Chevron Corp. (CVX) and Royal Dutch Shell Plc (RDSA) who are investing in North American LNG projects to export the fuel to Asian markets after prices fell because of a boom in shale gas output. Japan, the world’s biggest LNG importer, has been relying on gas and other fossil fuels to run power plants after the Fukushima disaster in 2011 led to a shutdown of most nuclear reactors.
“We have never been in the LNG or gas business before,” Tsukioka said. “But given the recent big changes in the environment, it doesn’t make sense as a Japanese energy company not to have LNG and gas in our portfolio.”
Idemitsu, based in Tokyo, plans to hold talks with potential Japanese buyers of the fuel, including power and gas utilities and companies that are interested in entering the country’s electricity production market, Tsukioka said. Whether prices for the LNG will be linked to gas market values will be decided through the negotiations with the buyers, he said.
The two companies will also study a plan to export as much as 700,000 tons of liquefied petroleum gas, said Hisao Sato, general manager of Idemitsu’s corporate planning department. LPG exports are scheduled to begin as early as 2016, the companies said in a statement.
Idemitsu and AltaGas will each own a 50 percent stake in the venture, which will be formed next month, according to the statement.