Japanese firms weigh plans for PDVSA-led LNG project

Sept. 19, 2008
Mitsubishi Corp., Mitsui & Co., and Itochu Corp. are said to be weighing plans to participate in a ¥1 trillion LNG project led by state oil firm Petroleos de Venezuela SA (PDVSA).

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 19 -- Mitsubishi Corp., Mitsui & Co., and Itochu Corp. are said to be weighing plans to participate in a ¥1 trillion LNG project led by state oil firm Petroleos de Venezuela SA (PDVSA).

Japan's Nikkei business daily reported that by taking a stake in the project, the three Japanese trading firms would gain access to LNG, which could then be sold to such customers as domestic electric power companies.

The paper said the arrangement also would enable Japan, the world's largest consumer of LNG, to further diversify the regions from where it obtains the imports beyond the current Asia, Australia, and the Middle East.

The combined stake acquired by Mitsubishi, Mitsui, and Itochu could reach a maximum of 20% or so, it said.

The Venezuelan LNG project, which would entail the construction of gas pipelines, liquefication facilities, and a shipping port, is expected to feature the participation of major European and US oil companies.

"These firms and the three Japanese trading houses are expected to sign a memorandum of understanding with PDVSA soon," the Nikkei said.

The proposed liquefication facility is to have an annual production capacity of nearly 10 million tonnes, or about 15% of the amount imported yearly by Japan.

Construction of facilities is expected to begin after the participating companies negotiate concessions. Operations at the facilities could begin as early as 2014.

Contact Eric Watkins at [email protected].