Japan, the world’s largest importers of liquefied natural gas (LNG) is looking to invest and buy into Papua New Guinea’s natural gas resources, banking on the Southeast Asian nation to become one of the new serious players in LNG exports. A recent deal sees Osaka Gas Co. paying 204 million US dollars to acquire stakes in Papua New Guinea natural gas assets owned by Australia-based Horizon Oil Ltd., as the Aussie gas and fuel company has new discoveries in the country and is mulling on building a new gas-export facility in-country.
Japan has traditionally bought into United States natural gas sources, as prices have radically dropped in North America due to new discoveries of relatively inexpensive shale gas fields. But Papua New Guinea – a country known for its lush jungles, tribal society, and lovely beaches – might just be the newest significant player in LNG exports next year when the 19-billion-US-dollar LNG project operated by ExxonMobil Corp. becomes operational. Unlike rival LNG suppliers from Middle East, shipments to Asia from Papua New Guinea won’t have to pass through the Malacca choke point near Singapore, and shipping costs – especially to Japan – will be relatively lower. Wood Mackenzie, a U.K.-based consultancy, estimates that he Papua New Guinea fields contain 26 trillion cubic feet of natural gas, roughly equivalent to what the United States consumes of LNG in a year.
Australia’s Horizon Oil has agreed to sell 40 percent of its Papua New Guinea assets to Osaka Gas. It will be receiving 74 million US dollars in cash up front, with 130 million US dollars to follow if the decision to make an LNG export facility pushes through. “This is in line with our policy to secure our own LNG, which should be cheaper to buy than cargoes from producers, as well as ensure more stable supply,” said a spokesperson from Osaka Gas. Japan has been ramping up its supplies of fossil fuels as all but two of its nuclear reactors are still idling due to safety concerns in the wake of the Fukushima nuclear disaster, leaving the Asian economic powerhouse to rely on LNG for thermal power generation.
[via The Wall Street Journal]
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