Japan’s Abe Eyes Mozambique’s Gas Reserves on Africa Visit

Japan’s Prime Minister Shinzo Abe may seek to secure natural gas supplies from Mozambique during a three-nation African tour this week, the first visit to the continent by a Japanese leader in almost eight years.

Japan, the world’s biggest importer of liquefied natural gas, has been seeking new energy sources after the Fukushima nuclear disaster. The world’s third-largest economy has been without nuclear power, which accounts for about a quarter of its energy needs, since September as all of the country’s 50 reactors have been shut pending safety reviews.

“Since the Fukushima accident, Japan’s imports of natural gas for electricity generation have risen enormously, including from Africa,” Katsumi Hirano, head researcher at the Institute of Developing Economies, an affiliate of the Japan External Trade Organization in Chiba Prefecture, said in a phone interview on Jan 8. “The development of natural gas is an extremely important matter for security and the national interest.”

Mozambique’s offshore fields may hold enough gas to meet global demand for more than two years, according to Empresa Nacional de Hidrocarbonetos, the national oil company.

The southern African nation, located on the east coast of Africa, plans to build four LNG units with a total capacity of 20 million metric tons a year by 2018, making it the largest LNG export site after Ras Laffan in Qatar. Chiyoda Corp. (6366), based in Yokohama, is among the companies bidding for contracts to construct the plants, which may cost $20 billion.

Coal Mine

Mitsui & Co. has a stake in the fields and Nippon Steel is developing a coal mine in the country, which is slated to start production in 2016.

Japan will also announce more than 60 billion yen ($572 million) in loans to Mozambique, the Nikkei newspaper reported on Jan. 6. The funds will be used to finance infrastructure projects including the construction of a transportation network that connects the country’s Nacala port to Malawi and Zambia, the paper said, without attribution.

Abe will arrive in Mozambique tomorrow after visiting Ivory Coast today, where he is scheduled to meet President Alassane Ouattara and other West African leaders. The Japanese premier will head to the Ethiopian capital of Addis Ababa on Jan. 13 and will give a speech at the headquarters of the African Union the next day.

Business Delegation

The last visit by a Japanese leader to Africa took place in 2006, when then-Prime Minister Junichiro Koizumi traveled to Ethiopia and Ghana.

Abe is the first Japanese prime minister to take a business delegation to Africa, reflecting a change in emphasis from aid to trade and investment that was the theme of an African summit in Japan in June. The delegation will include trading, natural resources and construction companies.

“Since 2000 onward, China’s engagement with Africa has re-energized everyone else looking at the continent,” Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research on emerging markets, said in a Jan. 8 phone interview. “Undoubtedly the Japanese re-energized engagement should be seen in the context of countering the Chinese to an extent.”

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net; Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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