Japanese companies to gain more control over LNG joint ventures with state-backed groups

The industry ministry announced on Tuesday that Japanese companies would gain more control over JOGMEC-backed liquefied natural gas joint ventures and recover their investments faster as part of measures aimed to strengthen the nation's security in energy.

The Ministry of Economy, Trade and Industry told a committee of resource and fuel policy it would encourage Japanese companies to invest in LNG.

METI aims at introducing a mechanism that prioritizes dividend payments made to?companies through joint investment vehicles established with the Japan Organization for Metals and Energy Security(JOGMEC), allowing for a faster recovery of investments in LNG production projects deemed crucial to energy security.

The framework allows companies to potentially purchase JOGMEC stakes and engage in management.

As geopolitical risk increases, the measures are designed to encourage corporate investment in LNG projects. This will ensure a long-term supply of super-chilled fuel.

Japan is the second largest LNG buyer in the world after China. A boom in artificial intelligence and rising costs of renewable energy, as well as a new national plan for energy, have fueled producers' appetite for long-term LNG deals.

METI also highlighted the need to reduce risk in LNG transportation, as long-term contracts are increasingly shifting to FOB terms (free-on-board), under which buyers bear all costs and risks associated with shipping.

METI, without providing details, said that the shift in LNG buying patterns places more transportation risk on Japanese buyers. It is therefore essential to improve business conditions to mitigate maritime risks.

METI said it would diversify sources and increase stockpiles to ensure stable supply of critical minerals as China, the top supplier, tightens export restrictions on certain minerals.

A METI official revealed that the ministry requested a budget of more than 90 billion yen (581 million dollars) for the fiscal years through March 2026 in order to support important mineral value chains. This includes bolstering stocks.

The official refused to give any details about the quantity or contents of the stockpiles. Yuka Obayashi reported the story. (Editing by Muralikumar Anantharaman, Mark Potter and Mark Potter.)

(source: Reuters)