Japanese latest to eye LNG exports

The rush to LNG exports continues with the announcement by Nexen Inc. that it had reached agreement ...

The rush to LNG exports continues with the announcement by Nexen Inc. that it had reached agreement with a consortium led by INPEX Corporation of Japan on development of its shale gas properties.

Nexen is selling a 40 per cent interest in its land in the Horn River, Cordova and Liard basins in northeast BC – it will remain the operator of those properties.

Marvin Romanow, Nexen’s president and CEO said, “The transaction provides us with world-class partners that have significant upstream and LNG expertise.”

The 40 per cent will be owned by INPEX Gas British Columbia Ltd. which is in turn owned 82 per cent by INPEX and 18 per cent by JGC Corporation, also of Japan.

Nexen will receive $700 million, half up front and half towards capital expenses required to develop the gas fields.

The deal is expected to close in the first quarter of 2012.

Once that has happened, the new partnership will proceed with the appraisal and development of the resource, depending on economic conditions.

And the parties will investigate the feasibility of “a potential downstream project including LNG exports.”

Nexen had an observer at the National Energy Board hearings on the KM LNG export permit hearings here in Kitimat but made no presentations at that time.

INPEX is no stranger to the oil and gas industry and has experience in LNG.

It currently has 71 oil and gas projects in 26 countries, making them Japan’s largest oil and gas exploration and production company.

They are engaged in exploration, development and production activity around the globe with production of more than 400,000 barrels of oil equivalent per day.

They also have the largest oil and gas reserves and production volume of any Japanese exploration and production company.

On LNG, INPEX has interests in large LNG projects in both Indonesia and Australia and is building a regasification terminal in Japan.

It has a 76 per cent working interest in the Ichthys LNG project in offshore Australia and is the operator. The project is expected to deliver LNG production volumes of 8.4 million tonnes per year.

JGC Corporation has extensive project management capabilities in the fields of petroleum refining and gas processing, LNG and petrochemicals.

 

As usual, the deal is subject to regulatory and financial approvals.