Japan's JERA to buy US shale gas assets for $1.5 bln, eyes output increase

• JERA will buy 100% of South Mansfield gas field
• Asset produces 500 MMscfd, includes 200 undeveloped locations
• JERA plans to raise output to 1 Bscfd in future

By Anton Bridge and Kantaro Komiya

TOKYO, Oct 23 (Reuters) - JERA, Japan's top power generator, on Thursday said it will buy natural gas production assets in the U.S. for $1.5 billion, marking its entry into American shale gas production.

The company said with the deal, it is seeking to strengthen its natural gas value chain, which it called an essential transitional fuel as the world decarbonises. It said the acquisition supports its strategy to build a diversified and resilient asset portfolio.

JERA has agreed to buy 100% of the interests held by pipeline operator Williams WMB.N and GEP Haynesville II in the South Mansfield gas field in western Louisiana's Haynesville Shale basin. GEP Haynesville II is a joint venture between GeoSouthern Energy, backed by Blackstone BX.N, and Williams.

The Haynesville asset produces more than 500 million standard cubic feet per day (MMscfd) and includes 200 undeveloped locations.

JERA, Japan's biggest importer of liquefied natural gas, plans to raise output there to 1 billion cubic feet per day (Bscfd) in the future, it said.

It added that the deal offers strategic value, citing proven reserves, established gathering, treating and transport infrastructure and proximity to Gulf Coast LNG and data-center hubs.

"The Haynesville acquisition substantially expands our partnerships in the United States," said Ryosuke Tsugaru, JERA's chief low-carbon fuel officer. "The benefits are clear: enhanced diversification for JERA's LNG value chain, expanded global reach across the gas value chain and overall risk mitigation in a volatile energy market."

Williams separately announced a $1.9 billion investment in Woodside Energy's WDS.AX LNG production and export terminal under construction in Louisiana.

Last month, Reuters reported that JERA was in advanced talks to buy natural gas production assets in the U.S. for around $1.7 billion, the latest example of Japan investing in the energy sector there.

JERA, a joint venture between Tokyo Electric Power 9501.T and Chubu Electric Power 9502.T, has been boosting its exposure to U.S. assets, recently signing long-term offtake deals totalling 5.5 million metric tons per year.

It also signed a letter of intent last month to potentially take supplies from Alaska's $44 billion LNG export project.

The latest U.S. investment will give JERA greater control of its supply chain as Japan prepares for surging power demand from data centres amid the artificial intelligence boom.

In 2023, Japanese gas supplier Tokyo Gas 9531.T paid $2.7 billion to buy Texas-based natural gas producer Rockcliff Energy.