Friday 9th December 2022 Font size:

Tokoy Gas makes space for EIG in $2.15bn deal

Monday, October 10th, 2022

Tokyo Gas holds a 5% interest in the Woodside-operated Pluto LNG project, a 1.565% interest in the INPEX-operated Ichthys LNG project, a 1% interest in the Chevron-operated Gorgon LNG project, and a 2.5% interest in the second train of the Shell-operated Queensland Curtis LNG project.

These integrated projects span Australia’s western and eastern seaboard and are major suppliers of LNG to Asia, with a diverse set of long-dated take-or-pay contracts with investment grade counterparties, and to Australia’s domestic gas markets.

EIG said late on Friday that the portfolio is expected to generate approximately one-million tonnes a year of LNG net to MidOcean, production that is underpinned by long-life reserves and a globally competitive cost structure. The portfolio benefits from experienced operators, including Chevron, INPEX, Woodside and Shell, and spans the LNG value chain from upstream operations to midstream, liquefaction and sales.

The acquisition marks the launch of MidOcean’s strategy to build a high-quality, diversified, global ‘pure play’ integrated LNG company and leverages EIG’s extensive investing experience in the global LNG sector, underpinned by several billion dollars of commitments to multiple LNG projects over the past 20 years, most recently including the acquisition of a controlling interest in GNL Quintero S.A., the largest LNG regasification terminal in Chile.

The transaction is also in line with the Tokyo Gas Group’s vision “Compass 2030”, where Tokyo Gas continues to demonstrate leadership in the transition to net-zero carbon dioxide emissions. 

“The launch of MidOcean reflects our deep belief in LNG as a critical enabler of the energy transition and the growing importance of LNG as a geopolitically strategic energy resource. We believe this transaction provides MidOcean with a foundational portfolio of cost-advantaged integrated LNG assets in a low-risk jurisdiction, ideally positioned to supply key customers in Japan, Asia and across the globe for decades to come,” EIG chairperson and CEO Blair Thomas said.

In June this year, EIG announced that LNG veteran De la Rey Venter, formerly with Shell, joined MidOcean as CEO, bringing 25 years of experience in global LNG operating, dealmaking and business leadership.

“With today’s announcement, MidOcean is taking the first step toward realizing its vision to build a material pure play LNG business that we expect will support the world’s transition to a net zero future. We see a number of opportunities to further expand MidOcean’s position in supplying LNG markets around the world and look forward to working with our new partners and customers,” Venter said.

The transaction is expected to close in first half of 2023, subject to customary closing conditions, including Australian regulatory approvals.

EIG has twice tried to enter the Australian LNG market, after launching a A$13.5-billion failed takeover bid for Santos in 2018 through its energy investment vehicle Harbour Energy, and failing to take a 10% interest in the Australia Pacific LNG project from Origin Energy for $2.12-billion, after joint venture partner ConocoPhillips exercised its pre-emption rights over the asset.

Woodside on Monday said it would look at potentially using its pre-emption rights over the Pluto LNG project, as part of its routine merger and acquisition screening process.

“We are aware that Tokyo Gas has announced their intention to divest a range of assets. Tokyo Gas is a foundation customer of Pluto LNG and we look forward to continuing to work closely to ensure ongoing provision of reliable supply.”

Tokyo Gas’ 3.1% interest in Santos’ Darwin and Bayu-Undan projects have not been included in the sales agreement.

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