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TG Natural Resources, in which Tokyo Gas America has a 93 percent stake and a unit of Castleton Commodities International holds the rest, has closed on a transaction to purchase a 70 percent interest in the East Texas gas assets from a unit of Chevron.
Tokyo Gas said the deal is in exchange for $75 million paid in cash and $450 million as a capital carry to fund development within the Haynesville formation over multiple years
According to Tokyo Gas, the capital carry allows for staged development and payment within TGNR’s existing cash flow.
This asset is expected to have a high profit margin and contribute to improved return on assets for Tokyo Gas’s US shale gas business, the firm said.
Also, this transaction will extend TGNR’s inventory life beyond 20 years at the current development pace, Tokyo Gas noted.
Tokyo Gas said this agreement, along with the $130 million sale of assets to Shizuoka Gas, is part of its ongoing initiatives to optimize its asset portfolio and improve asset efficiency.
Moreover, the firm will continue optimizing its shale gas assets in the US, strengthening an integrated energy value chain anchored in its shale business.
By concentrating development and operations around TGNR’s core assets, Tokyo Gas aims to drive cost synergies with existing infrastructure and further enhance asset efficiency, and secures a long-term supply of “competitively priced” natural gas.
Expanding LNG trading
Tokyo Gas noted that its group vision until 2030 emphasizes the transformation of the LNG value chain.
“By streamlining its US shale gas operations and further developing its natural gas and LNG value chain, including expanding its LNG trading business, Tokyo Gas will contribute to stable energy supply in Japan and other countries,” the firm said,
Tokyo Gas said in its new medium-term management plan last week that it aims to expand its LNG trading business further, including in the US.
In Japan, Tokyo Gas owns four LNG import terminals (Sodegaura, Negishi, Ohgishima, and Hitachi), and it buys LNG from various countries in the world, including the US, Qatar, Malaysia, etc.
In 2020, Tokyo Gas formed its LNG trading unit, TG Global Trading, to boost LNG trading volumes.
The firm said in the medium-term report that it aims to expand LNG trading by leveraging its existing assets such as current supply contracts, and boost value proposition through close communications with its business partners.