HomeNewsJapan's JOGMEC gearing up to support new LNG projects

Japan's JOGMEC gearing up to support new LNG projects

1/26/2024

(Reuters) - The Japan Organization for Metals and Energy Security is preparing to give financial assistance to Japanese companies for new LNG projects to ensure a stable supply of the fuel, its CEO said in an interview this week.

Japan is the world's second-biggest importer of LNG after China passed it last year. The fuel makes up 34% of the country's electricity energy mix.

State-owned JOGMEC has in the past provided financial support, mainly through equity investment, for many LNG projects, including Indonesia's Tangguh project, to help Japan secure a stable energy supply.

"We have received several queries from Japanese companies regarding new LNG projects and we are preparing to decide on financial assistance," Ichiro Takahara, JOGMEC's chairman and CEO, told Reuters, without giving any details on project locations or companies involved.

Resource-poor Japan aims to raise its self-sufficiency for oil and gas to more than 50% in 2030, from 33.4% in 2022, by boosting equity stakes held in overseas development projects.

According to a budget request from the industry ministry, which oversees JOGMEC, Japan's investment in oil and gas exploration and asset acquisition is expected to double in the fiscal year starting in April to 108.2 billion yen ($733 million), from 47.9 billion yen for the current year.

"Natural gas and LNG will remain an important energy source even after the realization of a carbon-neutral society," Takahara also noted.

"The establishment of production technologies for synthetic methane is expected to lead to the decarbonisation of gas itself, while gas could become a raw material for hydrogen and ammonia, which emit no CO2, if carbon capture and storage is used."

Under the five-year business plan started last April, it aims to raise Japan's equity offtake from oil and gas projects supported by JOGMEC by 70,000 barrels of oil equivalent per day (boepd) to 1.05 million boepd by March 2028.

The comments highlight that natural gas will remain an important energy source for Japan even after it joined nearly 200 other countries at the COP28 summit in December in agreeing to transition the global economy away from fossil fuels.

CRITICAL MINERALS

JOGMEC is also involved in helping Japan secure a stable supply of metal and mineral resources, including critical minerals used in electric vehicle batteries and battery storage.

It aims to support Japanese companies in buying stakes in mines for rare metals including lithium, nickel and rare earths, to get concessions on an annual output of over 107,000 metric tons in the five years through March 2028. For copper, it wants to help companies acquire equity stakes worth more than 40,000 tons a year.

In December, JOGMEC signed a cooperation agreement with Saudi Arabian investment fund Manara Minerals on coordinating investments in the mining and mineral resources sector.

"Similar collaborations with other countries may happen going forward," Takahara said.

Resource countries are increasingly keen on joining with Japan to build global supply chains for critical minerals, and not just export their resources, he said.

Last year, Japan's industry ministry selected 25 countries including Chile, Democratic Republic of Congo and Qatar, as potential targets of analysis based on their strategic significance in terms of natural resources and energy policy.

"JOGMEC would look around the world and deepen our relationship with important countries from the perspective of diversifying our supply sources, rather than focusing on certain regions," Takahara said, adding it will also reach out to countries outside the list of 25.

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