Japanese companies have launched a $21 billion global deal spree since 2023 to secure gas supplies amid Middle East and Ukraine market turmoil. Investments are concentrated on US Gulf Coast shale resources, supporting Japan's energy security and former President Donald Trump's goal for US energy dominance. Japan, the world's second-largest LNG buyer after China, aims to replace disrupted Middle Eastern supplies and declining Asian reserves.
Japanese firms are also inserting themselves at the heart of the US power build-out for AI data centres and acting as a bridge to bring American LNG to developing Asian markets. Japan has overtaken the UK, Canada and Australia as the primary source of foreign investment in US gas resources, accounting for two-fifths of the total over the previous four years. Analyst Saul Kavonic of MST Financial noted a "paradigm shift" for Japanese energy procurement, returning to bolster supply chain diversity despite higher costs.
Alongside US shale investment, Japanese LNG buyers have strengthened positions in Australian, Indonesian and Papua New Guinea gas fields. Mitsubishi Corporation acquired US producer Aethon for $7.5 billion this year, while Jera, Japan's largest power generator and the world's biggest LNG buyer, spent $1.5 billion to acquire the South Mansfield shale gasfield in Louisiana. The objective is to capture US demand through local production for local consumption, hedging against rising US gas prices and protecting LNG trading margins.
Despite a troubled history of ill-timed dealmaking in 2010-12 causing widespread impairments, a supercycle in gas demand to power AI data centres suggests this cycle will be different.
Source: Financial Times Companies · Summarized by HeadlinesBriefing