Japan’s trading company Mitsui & Co is in an advanced stage of talks with QatarEnergy to buy a minority stake in one of Qatar’s mega expansion projects, anonymous sources with knowledge of the development told Reuters on Friday.
Qatar’s state firm QatarEnergy is undertaking the world’s biggest LNG expansion project with multiple phases of expanding the export capacity of the offshore North Field, the world’s largest non-associated natural gas field, which Qatar shares with Iran.
Mitsui is close to buying a stake in one of the expansion projects, North Field South (NFS), which, if agreed, would boost Japan’s long-term gas supply from Qatar.
QatarEnergy currently holds 75% in NFS, with international oil and gas majors Shell, TotalEnergies, and ConocoPhillips owning minority stakes.
A Mitsui-QatarEnergy deal would follow a major LNG supply agreement Qatar has just signed with Japan’s biggest power utility, JERA.
Earlier this week, QatarEnergy signed a 27-year agreement with JERA to supply up to 3 million tons per annum (mtpa) of LNG from Qatar to Japan, with deliveries set to start in 2028.
JERA “remains committed to building a resilient, well-balanced LNG procurement portfolio by sourcing from the Middle East, Asia Pacific, the United States, and other regions,” said Global CEO and chair Yukio Kani.
For Qatar, the JERA deal would allow the world’s second-largest LNG exporter to regain some of the market share it has lost in Japan over the past decade. The 3 million tons of LNG per year would nearly double Qatari LNG supply to Japan, which was estimated at around 3.3 million tons in 2025.
To compare, in 2017, Qatar supplied about 10 million tons of LNG to Japan.
But back then, Japan was still the world’s top LNG importer and relied heavily on gas for power generation after closing all its nuclear power plants following the Fukushima disaster in 2011.
Since then, Japan has started to gradually return nuclear power capacity online, following safety inspections. Moreover, global LNG supply surged, and the flexible-destination U.S. cargoes have become more attractive to many buyers, compared to Qatar’s very strict destination clauses prohibiting buyers from reselling cargoes.
By Tsvetana Paraskova for Oilprice.com
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