People familiar with the matter say that Japan's largest power generator JERA has advanced discussions to purchase natural gas production assets located in the U.S., for approximately $1.7 billion. This is the latest example of an Asian nation investing into the American energy sector.

JERA was the highest bidder on the assets of GEP Haynesville II. This joint venture is between Blackstone-backed GeoSouthern Energy, and Williams Companies, a pipeline operator. The banks had solicited bids in recent weeks.

This deal marks JERA's entry into shale-gas production and gives one of the largest LNG buyers in the world more control over its supply chain. Japan is preparing for an increase in demand for power from data centers that are critical to the artificial intelligent boom.

Sources say that the Japanese company outbid other bidders from the United States, including several energy companies. However, they cautioned the deal was not guaranteed, and GEP may still look for other bidders or cancel the sale.

JERA declined to comment. GeoSouthern, Williams and JERA declined to respond.

Japan, a heavy importer of gas and oil due to its lack domestic production, has sought increased supplies of energy from its foreign allies after Russia's invasion in Ukraine roiled the markets.

The U.S. President Donald Trump has also boosted interest in U.S. gas, especially from Asian state-backed purchasers, by pushing for more U.S. imports of energy to settle negotiations with the top trading partners. The U.S.-Japan trade agreement, which was finalized earlier this week, included Tokyo's commitment to purchase $7 billion of energy annually from the U.S. JERA is a joint venture of Tokyo Electric Power Company, Chubu Electric Power and has increased its exposure this year to the U.S. Liquefied Natural Gas sector, signing a letter last week regarding potential supplies of Alaska's $44 Billion LNG export project. JERA hired Wood Mackenzie, an independent consultancy, to evaluate the proposed 800-mile (1,300 km) Alaska gas pipeline. This was reported earlier as a sign that JERA was considering support for the project.

GEP Haynesville II is one of the leading producers of natural gas in the Haynesville Shale Basin of Texas and Louisiana. This is the largest producing basin in the U.S. It wasn't immediately clear whether GEP had any other assets, besides the Louisiana land.

The company's efforts to liquidate the Louisiana assets coincide with a growing interest from buyers in the Haynesville Play, which allows private equity investors to profitably cash in on their investment.

Southwestern Energy bought the first version of GEP for $1.85billion in 2021, when U.S. Gas prices reached 12-year highs.

Investors have long sought out the Haynesville due to its proximity of existing and planned LNG-export sites along the U.S. Gulf Coast. They believe that the Trump Administration will approve new plants, boosting activity.

Rystad Energy estimates that GEP Haynesville II will produce 317.5 million cubic foot per day in 2025. By 2028 this is expected to double to 614 million cubic feet. (Reporting from Shariq and David French in New York, Additional Reporting from Katya Golubkova at Tokyo. Editing by Dawn Kopecki, Marguerita Chy.

(source: Reuters)