EIG will buy out Tokyo Gas’ shares in Chevron, Woodside, Inpex and Shell LNG projects
One of Japan’s top energy importers has sold stakes in four of Australia’s largest LNG projects, marking the latest shake up in the sector.
One of Japan’s top energy importers sold stakes in four of Australia’s largest LNG projects to US private equity player EIG Global Energy Partners in a $US2.15bn ($3.4bn) deal, marking the latest shake up in the booming sector.
EIG will buy out Tokyo Gas’ 1 per cent share of Chevron’s Gorgon project and 5 per cent stake in Woodside Energy’s Pluto LNG plants in Western Australia along with 1.575 per cent of Inpex’s Ichthys facility near Darwin and 1.25 per cent of Shell’s Queensland Curtis LNG development in Gladstone. Tokyo Gas will keep its interest in Santos’ Darwin plant.
The move marks a successful entry into Australia’s gas sector for EIG after it was foiled in its attempt to buy a 10 per cent stake in the Australia Pacific LNG project in Queensland last year after energy giant ConocoPhillips pre-empted the $2.1bn sale.
EIG saw a $14.4bn takeover bid for Santos rejected in 2018 with the South Australian producer’s board terminating discussions.
EIG’s MidOcean Energy will become the owner of the four stakes with the deal handing it 1 million tonnes a year of LNG for its portfolio.
“The launch of MidOcean reflects our deep belief in LNG as a critical enabler of the energy transition and the growing importance of LNG as a geopolitically strategic energy resource,” EIG chief Blair Thomas said.
For Tokyo Gas the move was prompted by its desire to focus on growth areas.
“Under the Compass Action plan, which is a concrete path for realising the group’s management vision, Compass 2030, our company will review its asset portfolio in order to allocate resources to growth areas. This transfer is based on this strategy,” Tokyo Gas said in a statement.
The deal remains contingent on Australian government approvals with Woodside noting it was aware of the deal.
“We are aware that Tokyo Gas has announced their intention to divest a range of assets. Tokyo Gas is a foundation customer of Pluto LNG and we look forward to continuing to work closely to ensure ongoing provision of reliable supply,” the company said.
Inpex said: “We can advise this development has no material impact on either Ichthys LNG production operations or LNG sales to buyers … there would be no impact to Tokyo Gas’s continued offtake of Ichthys LNG.”
Japanese utilities were increasingly focused on bigger stakes in energy projects, Credit Suisse said.
“It may be part of a growing trend by Japanese utilities to rationalise tiny legacy minority stakes acquired for information purposes, and focus on taking larger equity positions in future projects driven by security of supply considerations, in support of their core home utility markets,” Credit Suisse analyst Saul Kavonic said. “It should not be interpreted as a signal that Japanese companies at large are retreating from investments in LNG.
“On the contrary, it is likely Japanese companies will seek larger investments in LNG in wake of the global energy crisis, but this may come from a more select group of utilities, alongside traders and upstream specialists.”
The $US2.15bn price looked “strong” at first glance while pre-emptive rights may also loom as an issue, Credit Suisse added.
“Joint venture partners in Pluto, Ichthys, Gorgon and QCLNG will now need to consider the implications of having EIG as a partner, and their alternative pre-emptive rights options,” Mr Kavonic said.
EIG announced in June that former Shell executive De la Rey Venter would head up MidOcean as chief executive.
