News
28/01/26
Japanese firms add flexibility with US gas footprint
The unique structure of US LNG projects may attract more upstream investment
from Japanese firms, write Tray Swanson and Motoko Hasegawa London, 28 January
(Argus) — Japanese trading house Mitsubishi has this month made its first foray
into the US shale gas market, buying upstream assets in the Haynesville basin
from US firm Aethon. The purchase marks the fourth and largest Japanese
acquisition in US gas since March, after deals by compatriots Tokyo Gas, Jera
and Japex, and brings Japanese firms' total investment in US shale gas to $10bn
since the start of 2025. The spending comes after pressure from President Donald
Trump to invest in the US. The two countries signed a trade deal in July ,
lowering the reciprocal tariff rate on Japan to 15pc from 25pc in exchange for
$550bn of potential Japanese investment in the US. But more than the direction
of US political winds, the primary motivation for each company appears to be
their own long-term interests. The upstream investments reflect the firms'
individual assessments of business viability, think-tank the Institute of Energy
Economics Japan's executive analyst, Takafumi Yanagisawa, tells Argus. Such
decisions are part of a long-term outlook, considering both short-term factors
and long-term concerns such as durability through policy changes, he says. While
such investments may be seen as a matter of short-term convenience under the
lens of US-Japanese relations, allowing the Japanese government to claim
compliance under the trade deal, they also chime with Japanese firms' long-held
business strategies. For some of these firms, the investments mark a sizeable
expansion rather than an incursion into the US gas value chain. Tokyo Gas
subsidiary TG Natural Resources began gathering Haynesville acreage in 2017, and
acquired Rockcliff Energy in 2023, raising its Haynesville production to 1.3bn
ft³/d (13.4bn m³/yr) at the time. And Tokyo Gas, Jera and Mitsubishi have
processing agreements with US LNG export facilities, for which they must procure
their own feedgas. The upstream investments promise stable supply, protecting
the firms from the cross-hub basis risk that comes with sourcing gas connected
to the US' Henry Hub for shipment to international delivered markets in
Asia-Pacific and Europe. The excess gas not destined for liquefaction can be
marketed domestically for use in heavy industry and power generation, which
holds a particular upside given the US' artificial intelligence-driven data
centre buildout. In Mitsubishi's case, its new Haynesville production
complements a comprehensive US gas and power strategy. This includes
subsidiaries such as gas marketer Cima, which already handles 5bn ft³/d of
midstream supply, as well as power producer Diamond Generation and electricity
trading firm BETM. Upstream hedging Japan's largest LNG importer, Jera,
previously had similar exposure to US power markets but sold its interest in
three gas-fired plants in September. Jera bought its first US upstream stake in
the Haynesville basin a month later, strengthening its LNG value chain with
500mn ft³/d of production, equivalent to 3.5mn t/yr of LNG. Jera holds a
combined 6.5mn t/yr of LNG offtake from US projects due on line by the end of
the decade, and plans to double its output to 1bn ft³/d by 2030. Additional
Japanese investments in US shale gas are likely to continue, especially given
the unique structure of US LNG projects, Yanagisawa says. In the US, LNG
projects are often separated from upstream operations, with different entities
involved in supplying gas to each facility. This creates an incentive for
companies exposed to US LNG to also invest upstream as a physical hedge for
their Henry Hub-indexed LNG supplies. The project structure in other countries
requires much larger financial commitments because non-US LNG projects tend to
encompass both upstream and midstream value chains, presenting fewer investment
opportunities, Yanagisawa says. US shale acquisitions $bn Buyer Asset location,
output Value incl. debt Date Mitsubishi Haynesville, 2.1bn ft³/d 7 Jan-26 Japex
Colorado/Wyoming, 35,000 boe/d 1.3 Dec-25 Jera Haynesville, 500mn ft³/d 1.5
Oct-25 Tokyo Gas Haynesville, 1.4bn ft³/d from 2030 1 Mar-25 Mitsui Haynesville
(46,500 acres), na Undisclosed Jun-24 Tokyo Gas Haynesville, 1.3bn ft³/d 2.7
Dec-23 — company press releases Japan's US LNG offtake deals mn t/yr Company
Terminal Capacity Start date Tokyo Gas Cove Point 1 2018 Jera Freeport LNG 2
2019 Mitsubishi Cameron 4 2019 Mitsui Cameron 4 2019 Jera CP2 1 2029 Jera Sabine
Pass/Corpus Christi 1 2029 Mitsui Calcasieu Pass/Plaquemines/CP2 1 2029 Jera
Commonwealth 1 2030 Jera Port Arthur 2 2030 Tokyo Gas Calcasieu
Pass/Plaquemines/CP2 1 2030 Jera Rio Grande 2 2031 Send comments and request
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