May 1, 2012 / 1:00 AM / 7 years ago

UPDATE 2-Mitsui, Mitsubishi to buy Australia LNG stake for $2 bln

* Japan firms to buy 14.7 pct stake in project from Woodside
Petroleum
    * Firms to help in financing project, to take 1.5 mln tonnes
of gas/yr
    * Woodside shares gain 3.7 pct; Mitsui, Mitsubishi down in
weak mkt


    By Narayanan Somasundaram and Risa Maeda	
    SYDNEY/TOKYO, May 1 (Reuters) - Japan's Mitsui & Co 
and Mitsubishi Corp will jointly buy a 14.7 percent
stake in an Australian LNG project from Woodside Petroleum
 for $2 billion, underscoring Japan's demand for gas in
the face of a drastically reduced nuclear power generating
capacity.	
    Japan, the world's largest liquefied natural gas (LNG)
importer, is racing to secure gas supplies as LNG substitutes
lost nuclear capacity. Its last working nuclear power station 
goes offline on Saturday.	
    The country's nuclear capacity, which previously accounted
for about a third of the country's electricity production, has
slowly been taken offline since the Fukushima nuclear crisis
last year triggered nuclear safety concerns.	
    The crisis forced Japan to import 18 percent more LNG mostly
for power generation in the past year and prompted the
government to scrap a 2010 plan to increase the share of nuclear
energy in power generation to over 50 percent by 2030. 	
    Should Japan maintain some nuclear power capacity, the
country will probably burn as much as 20 million tonnes more LNG
per year by 2020 than the roughly 70 million tonnes used in the
year ended in March 2011, said Shigeki Sakamoto, a senior
researcher at Japan Oil, Gas and Metals National Corp.	
    "Even with the latest moves by Japanese utilities to secure
long-term supplies, they cannot help but rely on spot contracts
until 2016," Sakamoto said.	
    Japan is set to announce a new energy policy this summer.
The country's last operating reactor shuts for maintenance on
Saturday and there is no fixed schedule yet for restarting units
idled for regular checks or closed after last year's earthquake
and tsunami.	
    	
    	
  	
    Woodside shares rose 3.7 percent to close on Tuesday at
A$36.20 ($37.69), their highest since March 9, after the
announcement of the deal in an Australian Securities Exchange
filing. Mitsui shares closed 1.8 percent lower and Mitsubishi
ended down 2.1 percent in a weak overall Tokyo market.	
    Japanese firms have stakes in at least five other Australian
LNG projects, and are said to be eyeing the stake sale in BG's
 Curtis gas project. 	
    Australia has $200 billion of proposed LNG export projects
with plans to add more than 80 million tonnes per annum (mtpa)
of LNG production before the end of the decade to become the
world's leading LNG exporter, surpassing Qatar.	
    	
    DEAL DETAILS	
    The Japanese companies agreed to buy the Woodside stake
through a company called Japan Australia LNG (MIMI Browse) Pty
Ltd that would give them a 16 percent i n terest in Woodside's
East Browse and 8.1 percent in West Browse ventures.	
    They also agreed to take 1.5 million tonnes of gas a year
from the project, and offered Woodside help with getting
competitive finance from Japanese banks for the Browse project,
estimated by analysts to cost around A$30 billion ($31 billion).	
    Woodside said its stake in the project will fall to 31.3
percent from 46 percent. It will remain the operator of the
project. 	
    "The level of interest shown during this process reflects
the strong ongoing demand for LNG from premium developments such
as this," Woodside Chief Executive Peter Coleman said in the
statement.	
    A deal would finalise the auction process Woodside announced
in January after receiving approaches from several companies 
and allows Woodside to extract early value from the project.	
    It also adds some certainty to a project that has been
dogged by a dispute among its partners -- Shell, BP
, Chevron, and BHP Billiton  --
over the best location to process the gas. 	
    There is also mounting external opposition to building a gas
processing plant at James Price Point, which is favoured by
Woodside.	
    Last month, Australia gave partners in the Browse project
off its western coast more time to reach a final investment
decision, as attempts are made to end in-fighting and quell
opposition from environmentalists and landowners.
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