SYDNEY, Oct 9 (Reuters) - Tokyo Gas Co is in talks to buy a less than 10 percent stake in BG Group’s Australian liquefied natural gas project, the Wall Street Journal said, citing a senior official at the Japanese firm.
The deal includes the purchase of 1 million tonnes of LNG a year from the Australian project, which is under development. It was set to be announced “very soon”, Tokyo Gas representative director and executive vice president, Shigeru Muraki said in the paper.
A BG Group spokesman in Australia contacted by Reuters declined to comment.
A deal would add to a string of LNG transactions by Japanese companies scouring the market for fuel supplies as the country seeks to end nuclear power generation in the wake of an earthquake and tsunami that caused radiation leaks at the Fukushima nuclear plant in 2011.
It also offers BG a way to share some of the cost blowouts at the project. Earlier this year BG said the development cost had risen to $20.4 billion from an estimated $15 billion due to a higher Australian dollar, and increased labour and raw material costs.
BG started the process to sell an up to 20 percent equity stake, estimated by sources to be worth about $2 billion, in the first quarter of calendar 2012. However, it struggled with the deal as global volatility and a weakening outlook for commodities crimped investor appetite.
The British firm is among global oil majors developing $200 billion of liquefied natural gas export projects in Australia. Developers of other projects are also shedding stakes to free up cash.
Origin Energy and ConocoPhillips are in talks to sell a combined 15 percent stake in their Australian LNG project. Rival Woodside Petroleum last month completed the sale of a 16 percent stake in its Browse LNG project to Mitsui & Co and Mitsubishi Corp