In the latest action by a Japanese entity to secure gas from friendly places following Russia’s invasion of Ukraine, a unit of Tokyo Gas Co. Ltd. is in advanced talks to purchase Houston-based Rockcliff Energy from private equity firm Quantum Energy Partners, Reuters reported. The unit, TG Natural Resources, is expected to pay $4.6 billion, including debt, in the all-cash deal.
Japan relies heavily on imports of gas, which have been disrupted as a result of Russia’s invasion. The war has cut gas supply flows and led Japan to diversify from Russia’s Sakhalin project, which accounts for 9% of its liquid natural gas imports. About 9.5% comes from the United States.
Tokyo Gas owns 70% of TG Natural Resources, which is also based in Houston. Castleton Commodities International (CCI) owns the remaining 30%.
TG is raising funds from banks and private credit providers, sources close to the deal told Reuters. None of the players were available for comment.
Rockcliff produces more than 1 billion cubic feet of natural gas per day, operating out of the Haynesville shale formation that extends across Louisiana into East Texas.
The purchase would increase TG’s operations significantly. As of June 2022, the company was producing about 330 net million cubic feet per day, also from the Haynesville formation, according to its website.
Tokyo Gas has been engaged in moving its resources to areas of growth. In October, it sold its stakes in four Australian liquid natural gas projects to a unit of U.S. investment firm EIG for $2.15 billion.