* Japan's trading houses have $63 bln in cash
* Trading houses big energy investors after Fukushima
* Canada draws line in sand on state-controlled investors
By Aaron Sheldrick and Osamu Tsukimori
TOKYO, Dec 13 Acquisitive Japanese trading
houses will find the course clear of some of their toughest
competitors in the race for Canadian energy assets after Ottawa
said it would bar state-owned companies from taking majority
stakes in oil sands assets.
Japan's "Shosha", giant trading companies with stakes in
supply lines for everything from noodles to natural gas, have
snapped up global energy assets in the wake of the Fukushima
nuclear disaster. The strong yen and soft government financing
have helped bankroll the shopping spree.
But the privately-held firms have struggled to outbid state
giants such as those from China, with governments more directly
"I think that, particularly for the private sector companies
in Japan, the doors to the Canadian energy resources sector are
now wide open," said Victor Shum, managing director, downstream
energy consulting, at IHS in Singapore. "The Canadian government
welcomes foreign private sector companies."
Despite big spending already this year, the finances of
Mitsubishi Corp, Mitsui & Co and other trading
houses have barely been sapped. The seven biggest Shosha had
about 5.2 trillion yen ($63 billion) of cash or cash equivalents
at the end of September this year.
And with the Canadian government saying that much of the
C$650 billion ($660 billion) in investment in natural resources
the country needs in the next decade will probably have to come
from abroad, Japanese trading houses may have a golden
"They are politically more palatable," said Penn Bowers, an
analyst who covers the trading houses at CLSA Asia-Pacific
Markets in Tokyo. "They are quiet, predictable and want their
fair share of profits. They know how to get projects done and
that also helps for financing."
The trading houses may benefit from government-supported
financing and have high-level ties with politicians, but Tokyo
does not dictate government strategy, nor does the state have
majority stakes in the trading houses.
In approving the $15.1 billion bid by China's state-owned
CNOOC Ltd for energy company Nexen Inc on
Dec. 8, Canada drew a line in the sand against future
acquisitions by foreign government enterprises.
"Foreign state control of oil sands development has reached
the point at which further such foreign state control would not
be of net benefit to Canada," Prime Minister Stephen Harper
said, when approving the Nexen takeover.
Japan's government and trading companies were closely
watching the outcome of the CNOOC bid for Nexen, said Nobuo
Tanaka, an associate at the Institute of Energy Economics, Japan
and former executive director of the International Energy
"For Japanese companies, the benefits are the clearer
rules," Tanaka said. "The decision is based on considerations of
fair competition and restricting state-owned companies protected
by their governments from exerting an unfair influence."
The clarification effectively rules out further takeovers
from Chinese and Indian state-owned energy companies, which have
competed with Japanese firms for resources from Africa to Canada
as they sought to secure supplies to power economic growth.
For Japan and Canada, the gas link is likely to grow the
fastest. Japan is emerging as a top market for Canadian
liquefied natural gas (LNG) as developers gear up to export more
than 9 billion cubic feet a day, Canada's Natural Resources
Minister Joe Oliver said in September.
Japan is the world's largest importer of LNG and efforts to
cut its reliance on nuclear power after the Fukushima disaster
last year mean it's likely to remain so for some time.
Japanese companies have also been investors in Canada's oil
sands, the world's third-largest reserves of crude after Saudi
Arabia and Venezuela.
Japan Petroleum Exploration will make a final
investment decision on its Hangingstone oil sands expansion
project in Canada by the end of this year, the company said in
August, the second delay in the decision.
To be sure, Japanese companies can count on state support
for financing. Japan has allocated a 10 trillion yen credit
facility aimed at helping companies invest overseas as part of
its efforts to cope with a strong yen.
Under the programme that expires at the end of March, the
government has provided $14.2 billion in loans via Japan Bank
for International Cooperation to secure energy resources in 22
transactions, including six in Canada.
Officials at the trading houses declined to comment on
Canada's rule change.
($1 = 82.3900 Japanese yen, 0.9868 Canadian dollars)
(Additional reporting by Yuko Inoue; Editing by Simon Webb and