The Inpex Corporation and Frances Total SA have just approved a 34 billion dollar project in Australia. The cost outlay is huge and almost unbelievable given the current financial crisis. You may be wondering why the Japanese have put so much into this project, seeing as they are generally known for their highly strategic and well thought out moves. If you think they are becoming erratic you may be way off in your assumption.
The investment is on the Ichthys gas export project. This development is aimed at tapping natural gas from Australia’s northern coast; around 12.8 trillion cubic feet. Japan is currently the world’s top exporter of the LNG natural gas which is cooled to liquid prior to exportation.
Benefits of the project:
• Environmentally friendly
The Japanese are highly industrialised and have had environmental issues brought on by gas emissions into their atmosphere. The natural gas has less emission in comparison to other fuels. This will help Japan to clear their atmosphere of the emissions caused by coal.
• Cheaper to produce
In comparison to other fuels, especially coal; natural gas costs much less to produce. This will immensely reduce the production costs of the industries in Japan and Asia, giving them an edge in production.
• More reliable
Unlike other sources of fuel, namely solar power, the natural gas is more reliable. Its production will provide a constant and available source of power that will enable running of industries round the clock.
• Stable political environment
The Japanese have been able to invest such a huge cash outlay in Australia, due to their political environment. Australia’s politics are stable and thus their investment can be certain of being followed through to the end. An unstable political environment would present a bad investment.
• Proximity to Asia
Australia and Asia are close to each other. This also works in the favor of the Asians when it comes to shipping costs. They end up spending less and thus there are lower production costs. The project location is very well suited to the top importers of natural gas.
• Profitability
The Japanese are also confident that the Ichthys project will be a financial success. It is expected to produce a huge amount of condensate at its peak, the daily approximations of which is of 100,000 barrels. This translates to over 1 million tons of liquid in a year. The Japanese have also foreseen the great demand that will follow the natural gas as a substitute for other fuels.