Iran War Spotlights Japan’s East Texas Bid, Boosting Deals Firms

Japan’s US natural gas hedge bet is paying off for some of the Asian country’s largest companies and the large local law firms helping them gobble up natural gas assets.

The war in Iran—with the effective closure of the Strait of Hormuz and suspension of a massive Qatari liquefied natural gas export facility—triggered a global scramble for fuel sources outside of the Middle East. Japanese companies have already been pouring money into the Haynesville Shale, a popular source of natural gas straddling Texas and Louisiana with access to nearby refineries on the Gulf Coast.

“The investment by the Japanese has shifted the narrative from ‘optional diversification’ to ‘survival,’” said Jeff Nichols, the Houston-based chair of Haynes Boone’s energy group. The firm advised two companies selling $398 million worth of assets to Japanese joint venture JERA Co. last year.

Mitsubishi Corp. and TG Natural Resources also have turned to lawyers at some of the biggest firms in Texas, Vinson & Elkins and Kirkland & Ellis, to ramp up their positions in the region over the last 18 months. A small group of firms, including those representing businesses on the sell-side, has an early foothold as global demand for LNG contingency plans is expected to climb.

Japan takes 6% of its annual LNG imports through the Strait of Hormuz, Prime Minister Sanae Takaichi said in a post on X. The country on Thursday began releasing crude oil from its national reserves to fend off supply disruptions and has said it will allow more use of coal-fired power plants to offset some LNG imports.

“LNG will be definitely the backbone of energy security in Asia,” Yuya Hasegawa, deputy director of METI, the country’s ministry of economy, trade and industry known, said Wednesday at the CERA energy conference in Houston.

Less than two weeks before the war began, Japan committed to financing US oil, gas, and critical mineral projects, as the first projects under a $36 billion US investment package. The announcement marked the first tranche of Japan’s broader $550 billion pledge tied to a trade agreement, Bloomberg News reported.

Haynesville Play

Much like drilling in the Bakken and Permian basins, Haynesville is home to deep, high-pressure horizontal wells. Japanese companies have long invested in the region, but the more recent long-term deals mirror the country’s efforts to obtain energy diversity and security.

“There’s been activity in the Haynesville for years, but in really the last 12 to18 months, there’s definitely been a rush of activity,” said Chris Heasley, a partner at Latham & Watkins. “We are seeing a huge rush of folks looking to get natural gas assets on their books.”

Japanese clients initially took minority interest or non-operation positions in Haynesville, according to Taylor Landry, an A&O Shearman partner. They’re now looking to buy control of businesses with proven track records of getting gas out of the ground, into pipes, and out of the Gulf Coast port.

“They modified their strategy to have more control over their destiny, and the government is supporting and incentivizing that,” Landry said.

Porter Hedges in April 2025 advised Houston-based Chevron USA Inc. in selling 70% interest of its East Texas gas assets to TG Natural Resources, a company indirectly owned by Tokyo Gas Co., Ltd. and Castleton Commodities International, for $525 million to fund Haynesville development. Kirkland & Ellis represented TG Natural Resources in the deal, expected to generate more than $1.2 billion in value to Chevron.

“Given the appeal to LNG for a stable power generation fuel source in Japan that’s low carbon, in no near term are they going to reduce their dependence on LNG as a fuel source for power generation,” said Shay Kuperman, an M&A partner at Vinson & Elkins.

Kuperman led the V&E team that represented Mitsubishi Corp. in its January acquisition of Aethon’s gas and pipeline assets for $5.2 billion, marking the Japanese business enterprise’s entrance into the Haynesville and US shale gas business. Latham & Watkins represented Aethon on the transaction.

Japanese joint venture JERA Co. last month closed on its $1.5 billion acquisition of Haynesville upstream assets from Williams and GEP Haynesville II, a transaction guided by lawyers at Baker Botts. A Kirkland team advised GEP Haynesville on the sale.

Long-Term Story

Price spikes from the Iran conflict are driving a liquidity crunch. LNG companies hedged their production, stressing the market’s financial plumbing.

Sellers will have to pay “billions of dollars on their hedges in April,” but won’t get the benefit of physical sales from April until May or June, said Nichols. “The system is under strain.”

That creates opportunity for lawyers with specialized experience.

Haynes Boone, for instance, has a shipping group to handle ships that transport the LNG, and projects lawyers that focus on the construction of LNG facilities, said Nichols. Each of these areas need “specialized industry knowledge,” he said.

Asian and European companies have been more active in the space than US private equity players, which are still far from accessing deals in the multibillion-dollar range, Kuperman said.

“These foreign companies are not like many of our private equity financial player-type clients and are not in here to flip it,” said Kuperman. “They’re in here for the long term. They’re less sensitive to the fluctuations in commodity prices and oil and gas prices.”