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Japex to Buy 10% of Petronas C$11 Billion LNG Project in Canada

Japan Petroleum Exploration Co. (1662), the country’s second biggest oil and gas explorer, will buy a stake in Petroliam Nasional Bhd.’s C$11 billion ($10.7 billion) liquefied natural gas project in Canada.

The company known as Japex will acquire 10 percent of the plant to be built in the port of Prince Rupert, which will have an annual capacity of 12 million metric tons, it said in a statement today. It will also buy 10 percent of a shale gas field in the North Montney area of British Columbia,

Japex is following trading companies and utilities who are investing in North American shale gas fields to feed Japan’s power needs. The country, the world’s biggest LNG importer, had a record 1.63 trillion yen trade deficit in January as it bought more fossil fuels, especially gas, for power plants to replace nuclear reactors closed after the Fukushima disaster.

“We should work on ways to lower gas prices,” Japex’s Managing Director Mitsuru Saito told reporters in Tokyo today. He declined to give prices for gas imported from the Canada project or how much it will pay for the stakes in the plant and field. The LNG plant will cost between C$9 billion and C$11 billion, Japex said, citing estimates by the Malaysian state oil company known as Petronas.

Japex will buy 1.2 million tons a year of LNG from the plant and ship it to a receiving terminal it will build at Soma port in Fukushima prefecture, northern Japan. The Canadian plant and the Fukushima terminal will start operations by the end of 2018.

Japex shares reversed a decline of as much as 1 percent today after the announcement. The stock rose 2.6 percent to close at 3,625 yen on the Tokyo Stock Exchange.

To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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