Japan's major trading house Mitsubishi Corp. is in final negotiations with Royal Dutch Shell Plc as well as two energy companies in China and South Korea on joint production of liquefied natural gas (LNG) in western Canada, a leading Japanese business daily reported Thursday. With LNG demand surging in Asia, the alliance is aimed at ensuring steady supplies, the Nikkei Shimbun said, adding that Mitsubishi is in talks with Shell, the China National Petroleum Corp. (CNPC) and the Korea Gas Corp. to build an LNG terminal together in the vicinity of Kitimat, British Columbia. Via pipeline, each of the four firms will send to the facility gas collected at Canadian fields to which they own rights, the newspaper said, with poduction slated to begin around 2020, with the companies churning out 12 million tons of LNG a year. The project's total cost is seen exceeding JPY 1 trillion (USD 12.4 billion), and a broad agreement on stakes in the joint venture is expected as early as this month, it said. The international LNG market has to date been swayed by major producers, such as the Middle East and Australia, but now, production of shale gas is on the rise in North America. A four-way alliance between Japanese, South Korean, and Chinese firms and a resource major will create a new force in the global market. Mitsubishi, Japan's top handler of LNG, spent JPY 230 billion (USD 2.8 billion) in February to buy a 40 percent interest in a shale gas field from Canada's biggest natural gas company, Encana Corp. Meanwhile, Korea Gas is the world's single largest buyer of LNG among businesses, importing an annual 30 million tons. The state-run CNPC is involved in developing and producing natural gas as well as purchasing interests in foreign gas fields.
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