A consortium of Japanese banks and ECAs have extended a multi-million Canadian dollar loan to Cutbank Dawson Gas Resources (CDGR), a Canadian subsidiary of Mitsubishi Corporation, for the subscription of 40% interest in a British Columbia shale gas project.

The Japan Bank for International Co-operation (JBIC) is providing C$650mn, and the loan is co-financed by the Bank of Tokyo-Mitsubishi UFJ and Mizuho Corporate Bank, although the amount of their participation has not been disclosed.

The loan will allow CDGR to invest capital in the Montney land shale gas assets, securing a 40% interest in a partnership with Encana Corporation, Canada’s largest natural gas producer.

JBIC says Mitsubishi Corporation’s participation in this project to secure gas interests in North America will contribute to Japan’s energy security by diversifying the natural gas supply sources and easing the demand-supply balance in the Asian liquefied natural gas (LNG) markets.

Mitsubishi is also planning to use the natural gas produced in the British Columbian shale gas land to produce LNG and export it to Japan and the rest of Asia, making Canada a new, politically stable LNG supply source relatively close to Japan.