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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This Unique Strategy Just Paid Record Returns For One Nation

I've been discussing in Prime Meridians how natural resources investment is changing. With one of the biggest emerging trends being sovereign investment in mining and energy.

And new data this week showed why this critical shift is going to continue.

The numbers came from Japan--a nation that was one of the earliest to pursue strategic overseas investment in natural resource projects. A program that is now bearing fruit in a major way.

As reported by Platts, Japan's Ministry of Economy, Trade and Industry released new data Monday showing that the country's overseas oil and gas projects are producing at record levels. Amounting to 1.322 million barrels per day of oil equivalent for the fiscal year ended March 31. Related: Some Small But Welcome Relief For WTI

That's a 2.2 percent improvement from the 1.293 million boe/d that Japanese-owned projects pumped in fiscal 2013-14. Lifted by rising production from equity-owned fields such as Gharraf, Iraq and liquefied natural gas (LNG) projects in Papua New Guinea.

That jump means Japan is now able to meet more of its import demand using oil and gas that it owns. For the fiscal year, equity-owned fields supplied 24.7 percent of the country's total petroleum needs--up from a 23.3 percent share in the previous year. Related: A Winter Of Discontent For Russia

In fact, that's the highest share of supply from equity projects that Japan has ever achieved, since the government started tracking such data in 1973-74.

All of which suggests that Japan's strategy of investing in overseas energy projects is working as planned. Helping the nation secure supply, and insulate it from market shocks. Related: Why Today’s Oil Bust Is Not Like The 1980s

The government is projecting that equity production will meet an even larger share of domestic demand next year. And overseas petroleum interests could provide up to 40 percent of national supply by 2030.

You can bet that resource-hungry nations like China, South Korea and India are watching this direct investment strategy pay dividends. Which should only make them more aggressive in pursuing projects, as they seek to keep pace.

Here's to getting your share,

Dave Forest

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