SYDNEY: Japanese firms have taken their biggest step into Australia's growing Liquefied Natural Gas (LNG) sector, with five major power companies signing a sales deal worth Aus$70 billion (US$71.8 billion).
The Japanese utilities Tuesday committed to buying 4.0 million tonnes per annum (mtpa) of LNG from Australia's proposed Ichthys Project for 15 years, ahead of a final investment decision on the project, owner Inpex said.
Inpex said the total volume of 8.4 million tonnes per annum of LNG from the project was now accounted for, "with approximately 70 percent of the Ichthys LNG to be delivered to Japan".
"Subject to a positive final investment decision, the Ichthys project will represent Japan's biggest single financial investment in Australia," Resources Minister Martin Ferguson said.
"It will also be the first Japanese-operated LNG project."
Ichthys, which is owned by Tokyo-listed Inpex and France's Total, will supply Tokyo Electric Power Company, Tokyo Gas Co, The Kansai Electric Power Co., Osaka Gas Co., and Kyushu Electric Power Company Inc from 2017.
The project already has sales agreements with Chubu Electric Power Company, Toho Gas Co. and Taiwan's CPC Corporation.
Ferguson said Japan was a foundation investor in Australia's energy and resources sector, particularly in iron ore and coal.
"The Ichthys project would further strengthen the close relationship between our two countries to our mutual benefit," he said.
The Ichthys project, expected to cost US$30 billion, will take gas from a field in the Browse Basin off Western Australia and export it to an onshore liquefaction plant in Darwin via an 889 kilometre (550 mile) subsea pipeline.
It is estimated it will create more than 2,000 jobs during the five-year construction phase.
Japan is the world's largest importer of LNG and demand for gas in the country has increased markedly since a massive tsunami placed the country's nuclear energy supply under pressure in March.
Australia exported 20 million tonnes of LNG worth more than Aus$10.5 billion in 2010-11 while there are more than Aus$140 billion worth of LNG projects under construction Down Under.