Japan Petroleum Exploration, aiming to diversify its energy sources, has agreed to buy a 10-per-cent stake in a liquefied natural gas project planned in British Columbia from Progress Energy Canada Ltd.
Japex, as it's known, will also acquire a 10-per-cent interest in the North Montney natural gas play in northeastern British Columbia from Progress, which was acquired by Malaysian state-owned energy company Petronas late last year.
"Japex believes that importing natural gas as LNG from Canada, which has ample reserves, will help diversify Japan's LNG import, contributing to improved energy supply of Japan," Japex said in a statement Monday.
Petronas, through Calgary-based Progress, wants to transport natural gas from northeastern B.C. formations to Lelu Island, near Prince Rupert. Last month, Petronas selected TransCanada Corp. to construct the export pipeline that would lead into the Pacific Northwest LNG venture.
"With participation in this LNG project, Japex will be able to secure long-term natural gas import from Canada into Japan. Japex will further put a continuous effort to develop domestic natural gas infrastructures," Japex said.
Industry analysts say Japan, the world's largest importer of LNG, has been increasing its attention on LNG since the 2011 Fukushima nuclear disaster led to a prolonged shutdown of nuclear power reactors in the country.
A subsidiary of Japan's Mitsubishi Corp. has a 20-per-cent stake in the Royal Dutch Shell PLC-led LNG Canada proposal, while Calgary-based Nexen Inc. has a partnership with Japan's Inpex Corp for a rival LNG project yet to be named.
Michael Culbert, chief executive officer at Progress Energy, said last week that British Columbia has vast resources, and LNG developments will increase the value of natural gas. The number of rigs in northeastern British Columbia will climb sharply as the Pacific Northwest LNG project gets closer to completion, he told an LNG conference in Vancouver.
Shinya Miyazaki, who works for a subsidiary of Mitsubishi, has said Canada doesn't have a history for LNG exports, but he stressed that B.C. has the opportunity to prove itself to be a reliable LNG source.
Meanwhile, the Gitga'at First Nation said in a statement Monday that investors, including those from Japan, will need to engage in proper consultation with aboriginals.
"There is a gold rush mentality around LNG in British Columbia right now that is raising more questions than it's answering," said Arnold Clifton, chief councillor of the Gitga'at First Nation. "Promoting development by granting export licences and making supportive announcements before environmental assessments are completed and meaningful consultation with affected First Nations has taken place, only leaves these projects at risk."