Japan’s Idemitsu Kosan Co. (TYO: 5019) and Canada’s AltaGas Ltd. (TSX: ALA) will collaborate to develop a liquefied natural gas facility in western Canada, with the intent of exporting LNG to Asia.
An agreement has been reached to carry out preliminary feasibility studies in a joint venture, and the two hope to export 2 million tons of LNG per year by 2017.
The joint venture is a 50/50 split and will officially be formed in February. The early studies are expected to be completed by early 2014.
Liquefied natural gas has become a major industry hotspot as several international energy giants invest heavily across North America, hoping to benefit from the lucrative LNG exports to Asian countries, where demand is high and rising by the day.
“We have never been in the LNG or gas business before,” [Idemitsu EVP Takahashi] Tsukioka said. “But given the recent big changes in the environment, it doesn’t make sense as a Japanese energy company not to have LNG and gas in our portfolio.”
Idemitsu is based in Tokyo and intends to open up talks with future Japanese buyers.
AltaGas and Idemitsu also intend to look into exporting up to 700,000 tons of liquefied petroleum gas (LPG), beginning sometime in 2016.