Japan seeks LNG for its thermal power plants

Japanese firms are negotiating to buy a $4.4 billion stake in Australia's Wheatstone gas field as Japan shores up energy supplies.

Japanese utilities are scouring the world for fuel to power thermal plants after all its 50 nuclear reactors were shut down.

Tepco and Japan's other utilities burned 4.56 million tonnes of LNG gas in April, up 33 percent from a year ago and a record for the month, an industry association said on Wednesday.

The Wheatstone LNG project off the coast of western Australia, operated by Chevron Australia, is expected to produce 8.9 million tonnes of gas a year from late 2016. Chevron plans eventually to expand production at the $29 billion project to 25 million tonnes per annum.

Tepco, which is now under state control, had planned to buy the stake to secure additional supplies of liquefied natural gas.

Amid concern that Chinese and other foreign companies could snatch the deal from cash-strapped Tepco, the
utility asked trading house Mitsubishi Corp and shipping company Nippon Yusen KK to step in.

Japan's government would take part in the deal through state-owned Japan Oil, Gas and Metals National Corp., while the Japan Bank for International Cooperation and private banks would contribute about $3.3 billion in financing.

State-owned JBIC was also lined up to invest $1.1 billion and receive non-voting preference shares in a special
purpose company being set up by the investors.

Tepco has secured rights to purchase 3.1 million tonnes of LNG, and said in 2009 that it planned to take an 11.25 percent equity stake in Wheatstone, which would give it access to about a further 1 million tonnes a year.

A JBIC spokesman said the company had been approached about a possible investment and loan for Wheatstone,
while Chevron said talks with Wheatstone customers were ongoing.

Japan's Tohoku Electric and Chubu Electric Power Co have signed preliminary agreements with Chevron to each take 1 million tonnes of LNG a year from Wheatstone for 20 years.

Chubu also agreed to buy a 0.735 percent stake in Australia's Ichthys LNG project from majority stakeholder Inpex Corp.

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