Regional LNG: Osaka Gas, Inpex in talks on Australian LNG project: Report

Osaka Gas Co., Japan's second-biggest gas distributor, is in talks with Inpex Corp. about joining a $6 billion liquefied natural gas project in Australia as part of the utility's efforts to step up buying of gas assets in Oceania, Bloomberg reported.

Negotiations on an equity stake ``are still at an early stage,'' Sasuo Ryoki, head of Osaka Gas's energy resources business division, said in an interview in Tokyo . Inpex's Ichthys project holds an estimated 9.5 trillion cubic feet of gas.

Osaka Gas is accelerating investments in gas fields and LNG production to secure supplies before Indonesian shipments decline.

Osaka Gas is in talks with Chevron Corp. to take a stake in the $10.4 billion Gorgon LNG project. The Japanese utility has a 10 percent stake in Australia's Sunrise gas field, which contains more than 7 trillion cubic feet of gas and more than 300 million barrels of condensates.

Osaka Gas imported 6.7 million tons of LNG in the year ended March 31. Its imports from Indonesia, the world's largest LNG exporter, accounted for almost half of that.

``Supply will be in general tight in 2007 and 2008 because there are very few LNG projects under way, and Indonesia is cutting its exports,'' Ryoki said.

Indonesia's PT Badak NGL, the world's largest LNG facility, will reduce shipments to Japan, South Korea and Taiwan by 70 cargoes this year, more than initially planned, because of falling gas supply. The country also plans to supply more natural gas to its domestic market in the years ahead. (*)