Japan's dependence on liquefied natural gas imports has created a market situation whereby the country boasts a large number of integrated energy companies. However, having invested significantly in Spain's Sagunto terminal, Osaka Gas is leading the way in breaking free of the burden of merely meeting domestic demand to show promise in other fields.
Japan is well known internationally for its large number of integrated energy companies. The requirements placed on these companies to run the country's gas sector mean that they have acquired technical expertise which cover everything from building and managing liquefied natural gas (LNG) import terminals to running power stations and transmission grids (and, more recently, exploration and production).
However, less widely known is that some of these companies (such as Osaka Gas) have started to offer environmental consultancies to large businesses in Japan. This explains why 29% of all investments made by Osaka Gas in 2011 will relate to environmental initiatives (a far higher contribution to climate-related projects than most Western companies). However, the most interesting development is the company's growing investment overseas.
Osaka Gas has just bought a 20% share in Spain's massive Sagunto LNG terminal (64 million tonnes per annum import capacity). Yet this is only the start for Osaka Gas, which intends to spend 33% of its investment money on international expansion. Known already for having built some power stations in the US, it would appear that Osaka Gas sees potential benefits in the Western infrastructure crisis. It is certainly true that Europe is currently struggling to build or update the necessary infrastructure to meet its energy demand, particularly gas. This is something which the Japanese are ideally suited to resolve.
By continuing to expand internationally, Osaka Gas is achieving two distinct goals. Firstly, it is broadening its potential supply sources. This is a crucial part of Japan's energy strategy as China, India and Korea have started to compete ruthlessly for LNG in Asia Pacific. Secondly, and perhaps most interestingly, it is becoming one of the only companies in the world to be more than just an integrated energy company. In addition to its work in more upstream-related activities, Osaka is a very experienced mid- to downstream operator but, crucially, also manages a fleet of fuel transport vessels, runs an environmental consultancy and intends to compete in the renewables sector globally. Ambitious as this plan sounds; it would be difficult to bet against a company whose portfolio of expertise is so diverse. If Osaka Gas is successful on an international scale, it may prove - ironically - that even the integrated super majors are too niched.