U.S. Lures Wary Japanese into Country’s Most Expensive Gas Project

1124 words

6 minutes

U.S. Lures Wary Japanese into Country’s Most Expensive Gas Project

2025-05-27

Opinion

U.S.

/

Japan

/

energy

The Trump administration has asked Japanese companies and others to participate in the LNG development project in Alaska. It’s one of the projects that is likely to be brought up in the tariff negotiations between Japan and the U.S., but there are reasons why private companies can’t just say no.

Rich in oil and gas#

Alaska is rich in fossil resources such as oil and natural gas. According to the U.S. Energy Information Administration (EIA) and the Japan Energy and Metals National Corporation (JOGMEC), the state has the fourth-largest oil reserves of any U.S. state, at about 3.2 billion barrels. It also has the third-largest natural gas reserves, at about 2.8 trillion cubic meters, which is equivalent to about 2 billion tons of LNG. This is more than 30 times Japan’s annual imports.

The development is particularly advanced in the North Slope County in the northern part of the state. This region, which accounts for about 60 percent of Japan’s land area, is home to several oil fields in which major U.S. resource companies such as ExxonMobil and ConocoPhillips have interests. The oil produced is transported through pipelines and exported from ports in southern Alaska. Natural gas is also produced from the oil fields, but it is currently used for “enhanced oil recovery (EOR),” which increases crude oil production by reinjecting it.

A long history behind#

At a press conference announcing Mitsubishi Corporation’s “Management Strategy 2027” in April, Katsuya Nakanishi, president of Mitsubishi Corporation, said that the LNG development project in Alaska, U.S., “has a reasonable degree of difficulty.”

In fact, Japan and Alaska have a long history regarding LNG. In November 1969, Tokyo Gas and Tokyo Electric Power Co. imported LNG from Alaska to Yokohama for the first time in Japan. Mitsubishi Corporation conducted a feasibility study together with Tokyo Gas and also acted as an import agent. More than half a century has passed since then. Alaska is once again attracting attention.

This project has been delayed for a long time due to the high business risk, with U.S. energy companies such as ExxonMobil withdrawing their involvement. The initial project cost is estimated at approximately 45 billion dollars.

In order for this project to succeed, the U.S. side hopes that key East Asian countries and regions, including Japan, Korea, and Taiwan, which are key demand areas for LNG around the world, will participate in long-term purchases.

To reduce American trade deficit#

The plan would connect gas fields in northern Alaska with ports in the south via a pipeline to export liquefied natural gas (LNG) to Asia. The pipeline would be 800 miles (1,300 km), and while some in Japan have doubts about its feasibility, they are said to be prepared to say they will consider it if the U.S. side approaches them. According to one of the people, Japan wants to reduce the U.S. trade deficit with Japan of $56 billion and eliminate the risk of tariffs being imposed by the Trump administration. It is being considered as one of the cards to play in dealing with the Trump administration, which includes expanding LNG purchases from the U.S., strengthening defense capabilities, and strengthening investment in the U.S.

Supposed to be win-win project for all allies#

President Trump signed a number of executive orders on the day he took office on January 20. One of them included a commitment to unlock Alaska’s resource potential, “including selling and shipping Alaska LNG to other parts of the United States and our Pacific allies.”

Trump has positioned the project as a win-win for both Asian allies seeking stable energy supplies and Alaska. But Japan already has plenty of LNG. Japanese companies sold about 38 million tonnes to other countries in fiscal 2023, more than half of the amount consumed domestically.

Still, if the Alaska plan goes ahead, it could help Japan diversify its LNG sources from the Middle East, in addition to Russia, where it relies for about 10% of its LNG imports. Any deal would need to include flexibility, such as ensuring that the price is reasonable and allowing the Japanese side to resell, the same official explained.

Complicated issue#

Returning to the presidency, Trump has publicly pledged to impose tariffs on Canada, Mexico and China, but has barely mentioned economic or security relations with Japan. However, the tariff issue is an important agenda item for Japan. Japan is a major ally and largest investor in the United States, but during the first term of the Trump administration, it was shaken by demands over tariffs on steel and the cost of stationing U.S. troops in Japan.

The Ishiba administration, which does not have close ties to Trump’s “crew,” has sought advice from U.S. lawmakers and policy experts, including Senator Bill Hagerty and Kenneth Weinstein, Japan director at the Hudson Institute, a conservative think tank.

Weinstein told Reuters he has advised Japan to strengthen its energy ties with the U.S. and seriously consider the Alaska plan. Hagerty declined to comment on Reuters’ request for comment.

Moving forward with the project#

A spokesman for the state-run Alaska Gasline Development Corporation (AGDC), which oversees the LNG project, said it had discussed the plan with Japanese energy industry officials but declined to provide specific details.

The project, approved during Trump’s first term, faced opposition from environmental groups but was approved by the Federal Energy Regulatory Commission in 2020 and received final legal approval in 2022.

The AGDC said last week that it had reached an agreement with U.S. construction giant Glenfarne to move forward with the project.

Japanese officials to be present at a conference on LNG development project in Alaska#

According to sources, the Japanese government will send officials to an energy-related conference to be held in Alaska from the 3rd to the 5th of next month to gather detailed information on the project and assess its profitability. Details of the project have not yet been made public, and the Japanese government and companies are considering how to respond.

The meeting is scheduled to be attended by state government and corporate officials involved in LNG development, as well as Secretary of the Interior Burgum and Secretary of Energy Wright, who are involved in resource development policy in the Trump administration, and it is possible that specific details regarding the project will be discussed.

Some in Japan’s energy industry believe that Alaska’s LNG will lead to a stable supply of LNG, while others are cautious about investing due to issues such as cost.

Source: