Japanese agency to change rules for LNG investments

Tuesday, 11 February 2020
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A Japanese state agency is having its financing and aid rules changed so that companies from Japan can invest in more LNG import terminals in southeast Asia and in trans-shipment stations for Russian volumes.

Japan currently supports companies involved in LNG projects through investment and loan guarantees via a government-backed natural resource company called Japan Oil, Gas and Metals National Corp. (Jogmec).

However, Jogmec is limited to helping to finance upstream operations, such as natural gas exploration and production.

New legislation is being introduced in Tokyo to allow Jogmec to support investment in projects further downstream, such as LNG terminals in other countries so that they can import the fuel.

Transporting the fuel over long distance efficiently also requires LNG to be reloaded at trans-shipment facilities, the development of which will also be aided under the plan.

Global LNG demand is projected to double by 2040, according to the International Energy Agency.

Japan is currently the biggest importer with 77.32 million tonnes of LNG received in 2019, 6.7 percent down on the 82.85MT purchased in 2018. The second- largest importer is China with 61MT received in 2019.

The easing of Jogmec's aid for the construction of LNG terminals is expected to help Japan expand its LNG trading activities with more low-priced shipments from the US export expansion pointed at Asia.

Jogmec is likely to get involved with plans by Novatek, operator of the Yamal LNG plant and lead developer of the Arctic II LNG project, and Japanese shipping company Mitsui OSK Lines to cooperate on the construction of LNG trans-shipment stations on the Kamchatka Peninsula in the Russian Far East and near the Barents Sea port of Murmansk.

The proposed trans-shipment projects will secure additional LNG cargoes for Asia via the Northern Sea Route from the Yamal facility and the Arctic project planned for the Gydan Peninsula.

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