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Sources say that Wood Mackenzie has been hired by Japan to evaluate the Trump-backed Alaska LNG Project.

Two sources familiar with the matter confirmed that Japan hired Wood Mackenzie, an energy consultancy, to assess the proposed 800-mile Alaska gas pipeline project and LNG plant. This is a sign of its support for the $44billion project pushed by U.S. president Donald Trump.

One of the sources said that the assessment could ease concerns of potential Japanese investors and off-takers about a project which has been stalled for decades because of cost and logistical issues.

It is not clear what the scope and cost of this deal will be, nor if any report that results from it will be made publicly available.

The Ministry of Economy, Trade and Industry in Japan declined to comment. Wood Mackenzie and Glenfarne, the project developers Glenfarne as well as the state-owned Alaska Gasline Development Corporation AGDC did not respond to comments immediately.

Trump, since returning to office in 2017, has pledged to advance the mammoth plan to transport gas from Alaska's remote northern region across the state to be chilled and then shipped overseas as LNG.

Trump announced in July that Washington and Tokyo would form a joint-venture to develop the Alaskan LNG Project. Japan hasn't confirmed this plan.

The final terms of the trade agreement agreed last week included Tokyo's commitment to explore a potential new offtake agreement for Alaskan LNG. Japan has also committed $550 billion in unspecified U.S. investments, including energy and pipelines.

When asked about the Alaska LNG Project, Japan's Trade minister Yojimuto said at a late-July press conference that they were continuing to have close discussions with U.S. government officials.

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Despite Trump’s optimism, several Japanese government officials and leaders in the energy industry have expressed doubts over the projected cost of the project which could make gas more expensive than other sources.

Source: Yet, project developers are in discussions with at least five Japanese companies. These include JERA, Japan’s largest LNG buyer, Tokyo Gas, Osaka Gas and trading house Mitsubishi Corp. Inpex is an oil and natural gas explorer, whose biggest shareholder is the Japanese Government.

JERA's spokesperson said that it is "considering" this project. Tokyo Gas stated that it was "one candidate for procurement". Inpex stated that nothing has been decided about the project. Osaka Gas & Mitsubishi declined to comment.

Alaskan LNG developers already signed non-binding agreements with the state-owned Thai Oil and Gas company PTT Group, and Taiwanese State Energy Firm CPC Corp.

Securing a deal with Japan would boost the project's success chances. It is the No. The country is the world's No.

A deal of this kind could also open up financing options from Japanese state-owned banks, such as Japan Bank for International Cooperation. JBIC announced earlier this year that it would be willing to provide support, considering factors like any involvement of Japanese companies.

U.S. officials are promoting the Alaska project to Tokyo, highlighting its security benefits, comparing it to Middle East projects and pointing out that the project is closer to Japan than the Middle East. They also stress the fact the shipments will avoid choke points like the Straits of Hormuz, Malacca and South China Sea.

According to Japan's Finance Ministry, Japan receives approximately one-tenth its LNG from the U.S. and similar proportions of LNG from Russia and Middle East. Australia is responsible for 40%.

Wood Mackenzie conducted three studies for the Alaska LNG Project over the past decade, commissioned by AGDC as well as other stakeholders.

In a 2016 study, it was ranked poorly in comparison to other projects that could provide Asian markets such as Japan. However, a review of 2022 that took into account different financing structures and cost-reductions found it competitive with U.S. Gulf Coast supplies.

Alaska LNG developers have hired Australian engineering company Worley to conduct a cost estimate of the project. The goal is to reach a decision on the investment by the end the year. (Additional reporting from Yuka Obayashi in Tokyo and Katya Glubkova; Editing by Christian Schmollinger).

(source: Reuters)