Osaka Gas to invest in US shale gas

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Osaka Gas – the second biggest gas provider in Japan – is considering investing in one or more US shale gas projects.

Following the Fukushima nuclear plant disaster in 2011, Japan turned to imported LNG for their energy needs, importing a staggering 87.49 million metric tons in 2013, according to BusinessWeek.

Last year, the US Department of Energy approved Freeport to export more than 10 million tons of LNG per year. Out of that number, Osaka Gas has contracted to buy 2.2 million tons of LNG each year for the next two decades.

Apart from that, Osaka Gas would like to invest in shale gas exploration in the US. Motoyuki Hirabayashi, general manager for Osaka Gas, said the company expects to invest between $196 million and $293.6 million for stake in the development. It is believed that the company might receive project financing from major Japanese banks.

The announcement comes after the company lost a considerable amount on a similar shale gas project two years ago.
Osaka Gas agreed in June 2012 to pay $250 million to Cabot Oil & Gas Corp. for a 35 percent stake in the Pearsall shale oil and gas project in Texas – a project that later transpired to be “economically infeasible”.

The company’s acquisitions in the upstream facilities in the US is designed to safeguard it from price volatility, as it expects Henry Hub natural gas prices to go up.

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