Japan mulls using public finance for US LNG expansion: minister

Japan is considering providing public finance to help expand US LNG projects, Minister of Economy, Trade and Industry Koichi Hagiuda said May 10, as the country moves to phase out its dependency on Russian energy.

"Speaking of LNG, the US has expansion plans at existing projects, which could boost production in a relatively short period of time, and Japanese companies are showing interest [in those projects]," Hagiuda told a press conference.

"Japan intends to contribute to starting up these US projects with public financial support and proceed to cooperate with the US in order to stabilize global LNG supply," he said.

State-owned Japan Oil, Gas and Metals National Corp. provides equity capital to Japanese companies' oil and gas E&P projects to mitigate their financial risks, as well as issues liability guarantees to support their financing of upstream projects.

Jogmec also provides equity capital and liability guarantees for midstream LNG terminals and transshipment projects to secure stable LNG supply for Japan.

S&P Global Commodity Insights is tracking more than 59 million mt/year of new projects in North America alone, which will boost global LNG supply to around 81.5 Bcm/year by the middle of the decade, significantly reducing reliance on Russian volumes.

In addition to the projects already underway, there is another 103 million mt/year of capacity in North America currently vying for new customers, and several projects are now showing renewed commercial viability, S&P Global said in its recent quarterly report.

Cameron LNG

Among US LNG expansion plans, Sempra expects a proposed fourth liquefaction train at its Cameron LNG terminal to be "fully contracted or substantially so" by the end of June, but has pushed back its target for commercially sanctioning the project until later in 2023, the company's top executives said May 5.

Executives said the company plans to wait until after it finishes development work in summer 2023 to reach a final investment decision on the project -- a month-long delay from a previous estimate.

The LNG export developer is also awaiting federal approval of design changes to the expansion that would let the company pursue a single-train expansion capable of producing 6.75 million mt/year, in place of an existing authorization for a two-train expansion that would have added a total 9.97 million mt/year of production capacity.

Cameron LNG, the subsidiary that owns and operates the facility, had estimated that construction on the expansion could start as soon as April 2023. Sempra plans to sell the LNG under long-term sale and purchase agreements before making an FID.

Sempra entered into a heads of agreement in April to develop the project with its original partners in Cameron LNG: affiliates of France's TotalEnergies, Japan's Mitsui and a company jointly owned by Japan's Mitsubishi and Nippon Yusen Kabushiki Kaisha.

US role

Hagiuda's remarks came as Japanese Prime Minister Fumio Kishida said May 9 that Japan will ban "in principle" Russian oil imports following the latest commitment by leaders of the G7.

G7 leaders agreed on May 8 to phase out Russian energy, including oil, "in a timely and orderly fashion," while ensuring "stable and sustainable global energy supplies and affordable prices for consumers."

Tokyo's latest move comes a month after the government's announced decision on April 8 to ban Russian coal imports in phases as part of an earlier commitment by G7 nations.

Hagiuda, who had met US Secretary of Energy Jennifer Granholm during his recent visit to the US, had urged his counterpart to establish an infrastructure that can increase US production as a major oil and gas producer.

"As the Japanese government, we expressed our intention to cooperate in areas including upstream investments during the discussion," he said, adding that Japan sees the US as a major energy producer that is essential for energy security.

According to Haguida, "the US has a significant role to play" in its capacity building for energy supply as countries move to phase out Russian energy dependency.

The US, Japan's fourth largest LNG supplier in 2021, accounted for roughly 10% of Japan's total LNG imports of 74.32 million mt, while Russia supplied 9% of Japan's LNG imports as the fifth largest supplier, data from the Ministry of Finance showed.