Every time an international company makes a deal in the U.S., hope of a foreign investment renaissance seems to spring up.
The truth, however, is not lost on foreign investors who entered joint ventures (JVs) from 2010 to 2013 and watched their investments crumble. Since before the downturn, overseas dollars have been in short supply in any visible way.

Tokyo Gas saw its $485 million investment in Quicksilver Resources Inc.’s Barnett Shale development wither away as Quicksilver took impairment charges due to falling prices. For the fiscal year ending in March 2015, Tokyo Gas wrote off $290 million in value.

“Even in this low commodity environment it still looks like a great asset to us,” said Aki Tsuchiya, vice president of upstream business development for TG Eagle Ford Resources LP, a subsidiary of Tokyo Gas.

Unlike other Asian investors, Japan’s largest natural gas utility is not walking away from shale and hasn’t shied away from investment in U.S.

In late June, the company purchased a 25% working interest in VirTex Operating Co.’s Eagle Ford Shale assets in Webb and La Salle counties, Texas. It has also signed contracts with various LNG projects in the U.S. and Canada.

“The impairment is because of the commodity price, not the resource,” Tsuchiya said. “If the commodity price goes up, we should be fine. In that sense, we are still positive about the Barnett investment.”

What scares most investors from U.S. shale is precisely what Tokyo Gas wants: abundant and inexpensive gas. The company has embarked on its “Challenge 2020 Vision” to reshape the global LNG value chain.

Tokyo Gas estimates it will spend about $75 million on the Eagle Ford project, depending on average annual production. The investment includes about 34,000 acres in the Hawkville Field in South Texas, where Lewis Energy Group and BP Lower 48 have a joint project.

And the company will be hunting for more assets in the U.S. and Canada as it spends $3.2 billion in overseas investment through 2020.

Tsuchiya said its Eagle Ford gas is not destined for Japan, which is heavily dependent on imported natural gas. Rather, the company wants to sell the gas on the U.S. markets as part of an ambitious global strategy to lower its costs as it simultaneously invests in LNG export projects. Tokyo Gas aims to reshape the natural gas market.

“We will sell it to the market and purchase from the market. That’s kind of the plan,” he said. “In a macro sense [the Eagle Ford deal] is connected to the purchase of the gas molecules for export.”

The real aim is to normalize, to some degree, regional price differences. Japan is largely beholden to exports from Australia and the Middle East at costs that are vastly higher than Henry Hub prices.

Tsuchiya said Tokyo Gas would rather sell to a company such as Dominion Resources Inc. (NYSE: D) which will sell gas tied to Henry Hub prices rather than inflated international rates.

The company is continuing to eye fields in North America, despite the Quicksilver disappointment.

The company already invests in 11 LNG projects in six countries, and owns upstream interests in some of them. Tokyo Gas has signed contracts for LNG with the Cove Point LNG project in Maryland and the Cameron LNG project in Louisiana.

Tokyo Gas’ contracts with LNG providers run about 15 years. The company is taking that time to position itself at LNG terminals, build a global LNG network and even assemble its own fleet of transport ships.

The company has said it wants to own interests in gas fields and electric power stations worldwide.

Though the company’s most notable U.S. upstream investments have been in Texas, Tokyo Gas will be hunting for the best resource from a return perspective, Tsuchiya said.

“Nobody sees the gas price will be going below $2,” he said. “Everybody sees the gas price will increase in some sense.”

Nothing is off the table, including investment in the Marcellus Shale, depending on how prices change over time.

“It’s maybe not the right one, but we won’t deny any opportunity,” he said. “We’ll try to find good assets.”

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