Asia-Europe consortium to produce LNG in Canada

Japan's Mitsubishi said Thursday it was in talks with Royal Dutch Shell as well as a Chinese and a South Korean firm to produce liquefied natural gas (LNG) in Canada.

The deal, reportedly worth more than US$12.0 billion, would see the four companies including China National Petroleum and Korea Gas build an LNG terminal in the western province of British Columbia.

"It is true that talks are being held among the four companies although we are not at the stage of announcing details," a Mitsubishi spokesman told AFP.

The facility would produce about 12 million tons of the gas annually amid surging demand for the commodity across Asia, the Nikkei business daily reported Thursday.

Japan, which has few natural resources, and South Korea are the world's top LNG importers, accounting for nearly half of all imports.

The gas, which is temporarily liquefied for easier storage and transportation, would be delivered by a pipeline to the new terminal from gas fields owned by the four companies, the Nikkei said.

Production was expected to begin around 2020 with the total costs of the project more than 1.0 trillion yen (US$12.4 billion), the Nikkei report said, adding that it was unclear how much of the project each firm would own.

An agreement, subject to local approval, was expected as early as this month, it said.

In February, Mitsubishi spent 230 billion yen to buy a 40.0 per cent interest in a shale gas field from Canada's Encana Corp, while Korea Gas is the world's single-largest corporate buyer of LNG, importing 30 million tons annually.

Japan is pushing to find new energy sources amid strong public opposition to restarting the country's atomic reactors after last year's quake-tsunami disaster sparked the worst nuclear accident in a generation.