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LNG Japan is set to buy a 10% interest in the Scarborough natural gas project operated by Australia’s Woodside Energy.
The Japanese company will pay some $880 million for the stake in total, including reimbursement for expenses Woodside has already made in relation to the Scarborough project, the Australian company said.
In addition to the minority stake, LNG Japan will also buy 12 LNG cargoes annually from the Scarborough project, each of 900,000 tons, beginning in 2026.
Japan is almost exclusively dependent on energy imports for its consumption and liquefied natural gas is one of the country’s chief forms of energy imports.
Over the first half of the year, Japan imported some 32.62 million tons of liquefied natural gas. This was a 13% decline on an annual basis but still made Japan the world’s second-largest importer of the superchilled fuel, after China, which replaced it as the number-one LNG importer this year.
Japan is also the largest buyer of LNG from Australia because of its proximity, which makes the purchases more affordable.
The country was last month reported to consider proposing a global natural gas reserve similar to the oil reserve every member of the International Energy Agency is required to hold in case of an emergency.
For the IEA members, which include most developed economies including Japan and the United States, each country has an obligation to hold oil stocks equivalent to at least 90 days of net oil imports and to be ready to collectively respond to severe supply disruptions affecting the global oil market.
At the same time, however, Japan is working to reduce its dependence on LNG and imported energy as a whole to boost its supply security. To do this, the country has rethought its complicated relationship with nuclear and is bringing back reactors.
The Scarborough gas project, off the western coast of Australia, will have an annual capacity of 8 million tons of liquefied natural gas annually. The project is slated for completion in 2026.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.