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JOGMEC provides Equity Financing and Loan Guarantee for LNG JAPAN CORPORATION’s participation in the Scarborough Gas Project in Australia
JOGMEC provides Equity Financing and Loan Guarantee for LNG JAPAN CORPORATION’s participation in the Scarborough Gas Project in Australia
PDF version of this page (156 KB)March 26, 2024
Japan Organization for Metals and Energy Security (“JOGMEC”) announced that it will provide equity financing and loan guarantee to LJ Scarborough Pty Ltd (“Company”), a subsidiary of LNG JAPAN CORPORATION, which has participated in the Scarborough Gas Project in Australia.
In August 2023, the Company signed a Sale and Purchase Agreement (“SPA”) with a subsidiary of Woodside Energy Group Ltd (“Woodside”) to acquire a 10% non-operating participating interest in the Scarborough Joint Venture (the “Project”) from Woodside (the “Transaction”). The Scarborough gas field is located off the coast of Western Australia. JOGMEC also decided to provide equity financing and a loan guarantee to the Company.
From completion of the Transaction, JOGMEC will provide equity financing of up to 50% of the Company’s proportionate share of the Project’s development expenditure and a loan guarantee of up to 50% of total debt financing by the Company.
The natural gas will be transported via a subsea pipeline to the Pluto LNG facility, where LNG will be produced. LNG production at the facility will be up to 8 million tonnes per year and the Company will take up to approximately 0.8 million tonnes of LNG per year. The Scarborough reservoir contains a relatively low volume of CO2 (less than 0.1%). Greenhouse gas emissions during the production phase are planned to be mitigated as a result of the implementation of energy efficient measures in the design and operation of the project.
The natural gas and LNG are expected to play an important role in the global energy transition, and demand is expected to increase, especially in Asia where natural gas is required to displace coal and other higher carbon intensity fuel sources. In addition, the importance of energy security has recently been re-emphasized due to geopolitical risks. Furthermore, Australia is geographically close to Japan, and on top of that, there is an advantage that it is not necessary to pass chokepoints when the LNG is transported from Australia to Japan. Therefore, the Project is expected to contribute to Japan's energy security.
From completion of the Transaction, JOGMEC will provide equity financing of up to 50% of the Company’s proportionate share of the Project’s development expenditure and a loan guarantee of up to 50% of total debt financing by the Company.
The natural gas will be transported via a subsea pipeline to the Pluto LNG facility, where LNG will be produced. LNG production at the facility will be up to 8 million tonnes per year and the Company will take up to approximately 0.8 million tonnes of LNG per year. The Scarborough reservoir contains a relatively low volume of CO2 (less than 0.1%). Greenhouse gas emissions during the production phase are planned to be mitigated as a result of the implementation of energy efficient measures in the design and operation of the project.
The natural gas and LNG are expected to play an important role in the global energy transition, and demand is expected to increase, especially in Asia where natural gas is required to displace coal and other higher carbon intensity fuel sources. In addition, the importance of energy security has recently been re-emphasized due to geopolitical risks. Furthermore, Australia is geographically close to Japan, and on top of that, there is an advantage that it is not necessary to pass chokepoints when the LNG is transported from Australia to Japan. Therefore, the Project is expected to contribute to Japan's energy security.
Background Information
Corporate Data (as of March 26, 2024)
Participating Interest (as of March 26, 2024)
JOGMEC Assistance
(Note1) Approval has been made in accordance with JOGMEC’s technical, economic, and business-environment criteria and the consent from the Minister of Economy, Trade and Industry has been obtained.
(Note2) In February 2024, the condition precedents of the SPA were satisfied, which led to the condition precedents for JOGMEC’s provision of equity financing and loan guarantee for the Company also being satisfied.
| Company Name | LJ Scarborough Pty Ltd |
|---|---|
| Date of Establishment | July 31, 2023 |
| Head Office | Perth, Australia |
| Director | Mr. OKAYASU Kenji |
| Shareholders after JOGMEC’s funding | LJ：50.1％ JOGMEC：49.9% |
Participating Interest (as of March 26, 2024)
| Woodside | 90.0% |
|---|---|
| Company | 10.0% |
JOGMEC Assistance
| Date of Approval (Note 1) (Date of Fulfilment of the Condition Precedent) (Note 2) |
August 1, 2023 (February 23, 2024) |
|---|---|
| Provisional Estimated Amount of Equity Financing | Approx. USD 421Million |
| Provisional Estimated Coverage of Loan Guarantee | Approx. USD 250Million |
(Note1) Approval has been made in accordance with JOGMEC’s technical, economic, and business-environment criteria and the consent from the Minister of Economy, Trade and Industry has been obtained.
(Note2) In February 2024, the condition precedents of the SPA were satisfied, which led to the condition precedents for JOGMEC’s provision of equity financing and loan guarantee for the Company also being satisfied.
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