Japan trading houses keep faith in U.S. shale despite writedowns

Thu May 8, 2014 5:50am EDT
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* Japan trading houses to push on with N.America shale investments

* Say confident in sector's long-term prospects

* Japan utilities looking to diversify fuel sources in wake of Fukushima

By James Topham

TOKYO, May 8 (Reuters) - Japanese trading houses say they will push on with investments in North American shale oil and gas fields, despite writedowns in the sector on low gas prices and reduced reserve estimates.

The comments from executives at Mitsubishi Corp, Mitsui & Co, Itochu Corp and other trading houses are a vote of confidence in the long-term outlook for unconventional drilling in the United States and Canada, after they saw more than $600 million in writedowns over the last two years.

They also come as the appeal of North American shale has been dented by discoveries in other countries and the possibility that transport costs could rise due to new rates in the Panama Canal.

"(North American shale) is very attractive," Mitsubishi President Ken Kobayashi said following a results briefing on Thursday.

"There is an enormous infrastructure and market on top of the gas resources in the United States ... And Canada, with its access to the Atlantic Ocean, could also be a stable supply source compared to say Russia or the Middle East."   Continued...