Feb. 27 (Bloomberg) -- Osaka Gas Co. and Chubu Electric Power Co., utilities serving central and western Japan, will invest $600 million each for half the equity of the first unit of a U.S. liquefied natural gas plant.
The companies will each get 25 percent in Train 1 of a plant in southeast Texas operated by Houston, Texas-based Freeport LNG Development LP, the Japanese utilities said in a joint statement today. The LNG plant’s first unit will produce about 4.4 million metric tons a year and is scheduled to begin operating in 2018, according to the statement.
The investment, which will be finalized in the second half of the year after the project wins a construction permit, follows a 20-year supply contract Freeport signed with the Japanese firms in 2012. Converting gas into liquid was scheduled to begin in 2017, the partners said at the time.
Japan is increasing LNG imports after the Fukushima nuclear disaster forced the shutdown of atomic plants and increased reliance on gas-fired generators. Japan’s trade deficit widened to a record last month on rising import costs.
The bulk of Japan’s LNG imports are handled by domestic trading houses led by Mitsubishi Corp. The Freeport deal, which may use Japanese public institutions for financing, is among the first direct investments by Japanese utilities in overseas LNG facilities.
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