Japan's $10bn LNG Investment Plan Shows Shift in Priorities: WoodMac

Japan’s announcement on its commitment to invest additional $10bn in global LNG infrastructure projects points to a shift in priorities, Wood Mackenzie research director Nicholas Browne said September 26.

"A key announcement today is that Japan is planning to invest additional $10bn to develop infrastructure mainly in new and developing markets in the India sub-continent and southeast Asia, reflecting a shift in priorities. This is an evolution from the spending plan from two years ago which was focused on encouraging new supply sources and has been largely realised through Japanese investments in Arctic 2 and Mozambique LNG,” he said.

The announcement was made by Japanese industry minister Isshu Sugawara during the eighth annual Japanese LNG Producer-Consumer Conference that kicked off in Tokyo on September 26. Organised by the ministry of trade and industry (Meti) together with LNG importer Tokyo Gas, it brings together Asia's major LNG buyers with their key international suppliers, with talks focusing on ways to spread the profits from LNG trade more evenly. 

According to Browne, this new $10bn will include public-sector financing from JBIC (the Japan Bank for International Co-operation), as well as from Jogmec, the state-backed Japan Oil, Gas and Metals National Corp, in addition to purely commercial groups such as trading houses and banks. The government-owned Nippon Export & Investment Insurance will offer full coverage for LNG-related financing.

"Given the challenging credit rating of many of these markets, having this financing underwritten should reduce the financing costs and help LNG compete with other fuels like coal. For Japan, it serves the purpose of growing the global Asian LNG market, and improving liquidity and flexibility. Meanwhile, Japanese companies may also be beneficiaries given their strength in regasification terminal development, gas to power and gas infrastructure," he said.