Japan's Osaka Gas Seeks U.S. Shale Gas Stake

Osaka Gas Co, Japan's second largest gas supplier, is looking to buy a stake in at least one U.S. shale gas project to help supply fuel to the Freeport LNG project in Texas, according to a senior official, who said the company hopes to have nailed down a stake by the time the Freeport project starts operations sometime in 2017-2018.

Japanese gas and power utilities have been looking for ways to cut fuel costs after their LNG imports and payments rose to records last year due to the second complete shutdown of the country's nuclear reactors since the 2011 Fukushima disaster.

One strategy has been to sign up for new LNG supplies from the U.S., which is expected to grow to be the third largest exporter of the super-chilled gas by the end of 2020.

Osaka Gas and Chubu Electric have signed 20-year tolling agreements with Freeport LNG for 2.2 million t/y of LNG each from the project's first liquefaction unit. They have also invested in the plant.

In May 2013, Freeport received permission from the U.S. Energy Department to export LNG at a rate of more than 10 million t/y from its first two trains, but has been waiting for a final decision from the Federal Energy Regulatory Commission, which assesses environmental impact.

Osaka Gas is also said to be in talks on possible investments in gas fields in Canada as well as Africa.