Japan weighs foreign bank financing for $33 billion US gas projects

Japan is considering financing from foreign banks for natural gas-fired power generation projects in the United States valued at about $33 billion, part of its broader $550 billion US investment pledge tied to tariff relief.

"If financing from foreign banks materialises, it should further facilitate the procurement of foreign-currency funding needed to implement the investment initiative," the Ministry of Finance said in a post on the X platform late Sunday. The ministry did not identify the lenders involved but said the financing would be provided alongside loans from the state-backed Japan Bank for International Cooperation. Export credit agency NEXI could provide guarantees for loans extended by the banks, it added.

The power facilities are planned for Pennsylvania and Texas, two states central to US energy production. Reuters reported last week that JPMorgan Chase & Co. and other US banks are close to agreeing to provide financing under the investment framework, which Japan and the United States agreed as part of a deal to reduce US tariffs on Japanese goods. The current average US tariff on Japanese industrial goods stands at about 2.5 percent, though certain sectors face higher rates after the Trump administration's 2018 Section 232 tariffs on steel and aluminum.

The $550 billion pledge, announced during Prime Minister Shigeru Ishiba's visit to Washington earlier this year, represents one of the largest single-country investment commitments in US history. The natural gas component alone — $33 billion across two major facilities — would add significant baseload generation capacity to grids serving the Northeast and Texas, where power demand is rising as data center construction accelerates. PJM Interconnection, the grid operator covering Pennsylvania, has warned that capacity shortfalls could emerge as early as 2028 if new generation is not brought online.

Joshua Walker, who leaves the Japan Society at the end of July to become chief international officer of the US Chamber of Commerce, said Japan should take a more flexible approach to the arrangement, warning that it must remain mutually beneficial to endure beyond the Trump administration. The comment underscores the political risk embedded in the deal: a change in US administration in 2028 could alter tariff policy or investment incentives, potentially shifting the economics of the projects.

The financing structure — blending JBIC loans with commercial bank debt and NEXI guarantees — mirrors the model Japan used for LNG terminal projects in Louisiana and Mozambique over the past decade. Those projects, totaling about $28 billion in combined investment, reached financial close within 18 to 24 months of their initial announcements, according to JBIC disclosures. If the Pennsylvania and Texas projects follow a similar timeline, construction could begin in late 2027 or early 2028.

The involvement of JPMorgan and other US banks signals that the projects are expected to meet commercial lending standards, rather than relying solely on concessional government financing. That distinction matters for the US natural gas sector, where project financing has tightened since 2022 as some European and Asian lenders pulled back from fossil fuel lending under ESG mandates. US banks have stepped into the gap, with JPMorgan, Bank of America, and Citigroup collectively arranging more than $45 billion in energy project financing in 2025, according to data from Dealogic.

For Japan, the investment serves dual purposes: securing a reliable supply of US liquefied natural gas for its own energy needs — Japan imported 65 million metric tons of LNG in 2025, about 8 percent from the US — and deepening economic ties that could shield Japanese automakers and electronics manufacturers from future tariff actions. The Ministry of Economy, Trade and Industry has designated US energy infrastructure as a priority sector under its resource security strategy, which aims to diversify Japan's energy supply away from the Middle East.

This article is for informational purposes only and does not constitute investment advice.