New Dawn for Japanese Business in Iraq - Nikkei
TOKYO (Dow Jones Newswires), Jan. 17, 2011
Marking a start to full-on Japanese involvement in large-scale resource development in Iraq, a Mitsubishi natural gas project will receive the first longer-term trade credit insurance for a venture there in 21 years, the Nikkei reported in its Monday morning edition.
No Japanese firm has taken part in a long-term Iraqi resources project since the necessary trade credit insurance became unavailable with the Middle Eastern country's 1990 invasion of Kuwait.
The Japanese government did restart short-term credit insurance in 2005. With Iraqi Prime Minister Nouri al-Maliki forming a new government last month, filling a political vacuum, Japan will reinstate the coverage lasting two years and longer that is needed for medium- and long-term projects. The U.K. and Germany began issuing credit insurance again last fall for companies operating in Iraq.
Mitsubishi will join a natural gas extraction and processing project in Basra. It will form a local joint venture as early as next month with Shell and a gas company under Iraq's Oil Ministry. The Japanese trading house will take a 5% stake, while Nippon Export and Investment Insurance will underwrite its initial investment of about Y3.5 billion. Shell will own 44% of the venture, with the Iraqi gas company holding a 51% stake.
The venture will collect natural gas released during oil production and refine it for local distribution. Plans call for eventual exports to Japan and elsewhere. Project costs are expected to run from several hundred billion yen to around Y1 trillion, and Mitsubishi may make additional investments.
Competition for contracts to develop Iraq's abundant oil and gas has grown fierce as governments support domestic companies in public-private efforts. With its safety net for investment, Tokyo aims to help Japanese firms get a foothold and to diversify the nation's sources of energy.
Copyright (c) 2011 Dow Jones & Company, Inc.
- Mitsubishi Heavy Bets on New US Turbomachinery Demand (Feb 17)
- Shell-Led Group Delays Decision On Canada Gas Export Plan (Jul 12)
- Japanese Banks Expand To Ranks of World's Biggest Energy Lenders (Jun 09)