Sumitomo seeks to up stakes In Tangguh LNG project: Report

Japanese trading powerhouse Sumitomo Corp is seeking to increase its stake in several liquefied natural gas (LNG) projects, including Tangguh LNG project in Irian Jaya, according to Dow Jones Newswire.

The move came after another Japanese trading powerhouse Nissho Iwai Corp will spin off its LNG division to create an equally-owned joint venture with Sumitomo effective October 1 this year - allowing the latter to tap into full-scale LNG businesses for the first time.

According to the report, Sumitomo will initially focus on increasing stakes in the LNG projects in Indonesia and Qatar that its partner Nissho Iwai has already been involved in.

?The joint venture will then move on to secure new (LNG) supply sources," Michihisa Shinagawa, general manager of Sumitomo's energy division told Dow Jones Newswires in an interview this week.

Nissho Iwai is the second largest LNG supplier to Japan - the world's biggest LNG consumer - after Mitsubishi Corp.

Nissho Iwai supplies 15 million metric tons a year of LNG to Japanese power and gas companies from Indonesia and Qatar, and boasts a market share of about 28 percent.

Shinagawa said the new joint venture can take advantage of Sumitomo's solid financing power and credit worthiness in LNG businesses. Its relationships from previous oil dealings with majors such as Exxon Mobil Corp. and BP PLC as well as Japanese power and gas companies would also be a plus, he said.

Sumitomo aims to secure an additional source of LNG in Indonesia's Tangguh project in Irian Jaya, where Nissho Iwai holds a 1.1 percent stake, Shinagawa said.

"We are thinking of taking (a larger) stake in this project." he said.

Indonesia's state-owned oil and gas company, Pertamina, has named Nissho Iwai as LNG marketing assistant for the Tangguh project, which is operated by BP. (*)