[Stingray2004]

Pretty big news by the Government of Japan considering that Japanese majors Mitsubishi, Inpex, and others are already heavily involved in Canadian west coast LNG projects.

Japan Eyeing Billions In LNG Investments In Western Canada

Financial Post
Claudia Cattaneo | 13/04/04 6:04 PM ET

VANCOUVER • Japan is prepared to invest billions directly in natural gas infrastructure in Western Canada as part of a plan to secure massive supplies of liquefied natural gas to replace nuclear power, a top government advisor said Thursday.

Canada touts ‘energy superpower’ status to secure new customers in Asia

As the United States drags its feet on whether to approve the Keystone XL oil sands pipeline, Canada’s federal government is continuing its push to secure new energy customers in Asia.

The plan, a new model for Japan, could intensify the race by Asian countries to lock down Western Canada’s energy resources and infrastructure, which so far has been led by China.

Tokyo-based Tadashi Maeda, managing executive officer of the Japan Bank for International Cooperation, said Japan is ready to start discussions with private and government entities in Canada to support construction of pipelines and liquefied natural gas terminals to serve the Japanese market exclusively.

“The Japanese government is [prepared to make] a strategic investment for the purpose of developing a commodity market for natural gas, a more transparent and flexible market,” Mr. Maeda said on the sidelines of the Pacific Energy Summit, the platform picked by Japan to announce the plan. “So we are going to make some strategic investments to fill the gap of the infrastructure needs.

“The pipelines and export terminals are imperative. Therefore if it is needed, we are going to bring some capital to cover the cost of the infrastructure.”

While the plan is just now being rolled out, Japan hopes to nail it down “relatively quickly” so it can start importing Canadian LNG by 2020.

Japan found itself short of energy after the earthquake and nuclear disaster two years ago caused the country to back away from nuclear power because of safety concerns.

Mr. Maeda said only two of Japan’s 50 nuclear plants are still in operation. The energy gap has been filled by stringent energy conservation and a large increase in LNG imports.

Mr. Maeda said Japan is also looking at importing gas from the United States, but is keener to forge an energy partnership with Canada.

LNG transportation costs from Canada’s West Coast are lower because of its proximity to Asia and Japan believes LNG exports are more likely to move ahead from Canada than from the West Coast of the United States.

The Japanese government’s planned investment in Canada could take many forms, Mr. Maeda said. It could involve a consortium of Japanese energy companies benefitting from government loan guarantees or it could involve direct government investment. It could also mean financing for standalone pipelines and liquefaction plants that are not backed by supplies of natural gas.

Japanese companies are already participating in the nascent LNG industry in Western Canada. Six LNG export terminals are being planned for the northern British Columbia Coast. Japan’s Mitsubishi is a partner in the LNG Canada project led by Royal Dutch Shell PLC. Japan’s Inpex is a partner in a project planned by China’s CNOOC Ltd., which last year acquired Nexen Inc.

But the Japanese government wants to play a direct role because Japanese companies’ interests are not always aligned with those of the government, he said. For example, companies are free to sell the LNG to many markets, while Japan wants to be able to count on as much Canadian supplies as possible.

Japan is not worried that direct government investment will trigger a backlash in Canada similar to that stirred by the takeover of oil and gas producer Nexen by CNOOC because it doesn’t involve state-owned enterprises, he said.

http://business.financialpost.com/20..._lsa=9f1c-1059