Japanese groups stage $21bn deal spree to secure gas supplies
World’s second-biggest buyer of LNG targets shale resources on US Gulf Coast amid market upheavals
Japanese companies have embarked on a $21bn global deal spree to strengthen their grip on gas supplies following the market turmoil triggered by conflicts in the Middle East and Ukraine.
The investments since 2023 have been concentrated on shale resources in the US Gulf Coast, supporting Japan’s energy security drive and Donald Trump’s goal for US energy dominance, according to energy data analytics firm Enverus.
Japan is the world’s second-largest buyer of liquefied natural gas after China.
As well as seeking to replace disrupted Middle Eastern supplies and declining reserves in Asia, Japanese companies also have ambitions to insert themselves at the heart of the US power build-out for AI data centres and to act as a bridge to bring American LNG to developing Asian markets.
Japan has now overtaken the UK, Canada and Australia as the primary source of foreign investment in US gas resources, accounting for two-fifths of the total over the previous four years.
“A paradigm shift has taken place for Japanese energy procurement in the wake of the Iran war with a return to bolstering diversity of supply chains, even if it comes at an additional cost,” said Saul Kavonic, senior analyst at MST Financial.
The supply disruptions in the Middle East have cemented US leadership as a destination for gas investment and put previously unlikely supply sources such as Alaska or Argentina back into the frame.
Alongside substantial investment in US shale, Japanese LNG buyers have strengthened positions in gasfields in Australia, Indonesia and Papua New Guinea in the past six months.
“For the gas markets this is a rearrangement caused by geopolitical circumstances,” said José Luis Vittor, oil and gas practice lead at Womble Bond Dickson. “For the Japanese, it’s having control of the resources.”
Tokyo sent a key policy signal in its foundational energy plan, adopted last year. It stated that gas would maintain a crucial role in the power system beyond 2040 and encouraged utilities to secure long-term LNG contracts and invest in gas resources and export infrastructure.
Jera, Japan’s largest power generator and the world’s biggest LNG buyer, spent $1.5bn last year to acquire the South Mansfield shale gasfield in Louisiana.
Global chief executive Yukio Kani said the US was previously under-represented for a “global supply portfolio” and “provides huge flexibility” to divert supplies elsewhere if surplus to Japan’s requirements.
However, Japan has had a troubled history of investing in US shale. A previous bout of ill-timed dealmaking in 2010-12 was disastrous, causing widespread impairments across the trading houses as gas prices fell.
Many are convinced that a supercycle in gas demand to power AI data centres means this time will be different.
Katsuya Nakanishi, chief executive of Mitsubishi Corporation, said the trading house’s $7.5bn deal this year for US shale gas producer Aethon would allow the group to ship gas to Europe but its main goal was to supply American customers.
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“The objective with Aethon is to capture US demand through local production for local consumption,” he said.
Owning the resources will help Japanese companies hedge against rising US gas prices and protect margins for LNG trading businesses.
Energy lawyers said Japanese companies seemed willing to pay a premium for ownership, although some warned that rising price tags could stifle future gas sector deals.
“The Japanese appear increasingly willing to pay up to own the molecule,” said Rob Wilson, president of East Daley Analytics.