Energy in Japan | Raising the stakes | The Economist
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Lacking natural resources, Japan imports more than 95% of its energy.
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Almost all its oil and a quarter of its LNG come from the Middle East. To reach Japan ships must travel for 20 days, passing near pirate-infested waters. Sakhalin, by contrast, is just three days away.
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Today, however, many energy projects are starved of capital because of the credit crunch, energy prices are low and the yen is strong. Since mid-2008 the price of crude oil has fallen by two-thirds and the yen had at one point appreciated by as much as 20% against the dollar. This has given Japanese energy firms a window of opportunity to make foreign acquisitions.
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In January Nippon Oil bought rights to oilfields in Papua New Guinea. Inpex, Japan’s largest oil-development company, has acquired rights to oil in South America and Australia. A consortium that includes Nippon Oil and Inpex is vying for rights to a project in southern Iraq. And this month Hugo Chávez, Venezuela’s president, visited Tokyo to sign energy deals.
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JBIC can put around $12 billion a year towards energy acquisitions.
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A stake in an oilfield does not always entitle the owner to a share of its output, rather than a share of the revenue when the oil is sold on the open market. But ownership helps absorb the shock of sudden price increases or tight supply. And some contracts do specify that in the event of a crisis, output is reserved for the owners.
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Japanese executives also complain that Chinese firms, which have plenty of capital from state-run banks and face less pressure to show profits, are overpaying and driving up prices.
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JBIC encourages Japanese firms to form consortiums to increase their heft.
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