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Japanese Prime Minister Shinzo Abe Travels to Latin America, Signs Energy Deal With Mexico

First Posted: Jul 29, 2014 08:10 AM EDT
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Japanese Prime Minister Shinzo Abe in Latin America

Japanese Prime Minister Shinzo Abe kicked off a nine-day Latin American tour Friday with a visit to Mexico to increase Japan's economic and diplomatic ties with the nation. 

He discussed both trade and energy deals during the visit, as Japan is hoping to invest in Mexico's potential oil and shale gas fields to bring new energy investments to Japanese markets. 

Shinzo's visit comes fresh off the heels of Chinese President Xi Jinping's recent Latin America tour, during which he made economic and trade deals with Cuba and Venezuela. Shinzo's tour is also focused on increasing trade deals and boosting Japanese investments in key sectors like energy and infrastructure development, according to The Diplomat

On Friday, Abe attended a bilateral summit with Mexican President Enrique Peña Nieto in Mexico City, during which a deal was struck regarding cooperation in energy supplies. A deal was signed between Japan Oil and Metals National Corp. (JOGMEC) and Mexico's Pemex. President Nieto signed a law last December that allowed Pemex to partner with foreign companies, and the company has since been looking for a partner to help develop its offshore fields. One of its oil fields is in the Perdido area near Texas, which houses between 150 and 200 million barrels of oil. 

The deal includes the production of a pipeline from fields in the Gulf of Mexico to the west coast, where the natural gas would be liquefied and sent to Japan. The plan is expected to be implemented by the mid-2020s. Sources from the Japanese government also said they hope that Japanese companies will help develop the natural gas fields, pipelines and LNG facilities in the coming years, which will equal an investment valued at 1 trillion yen ($9.8 billion). 

Besides focusing on business deals, Abe also visited the city of Teotihuacan and climbed the Pyramid of the Sun. 

He then visited Trinidad and Tobago, where he attended the first ever Japan-Caribbean Community (CARICOM) summit in the hopes of brokering fishing, energy and disaster-prevention deals with the community. 

He will then travel to Chile, Columbia and Brazil, where a statement is expected to be signed Tuesday in conjunction with Columbian President Juan Manuel Santos to increase Japan's participation in developing natural resources like oil and coal. 

Abe hopes that deals with Brazil will allow for the most economic gain for Japan, as Japan is expected to make large investments in Brazilian infrastructure. Japan hopes to invest in ports, roads and rails to improve travel to the Cerrado region, which is where the Japanese investment of soybean production takes place.

However, The Diplomat argues that it will be difficult to trump Xi's visit to Brazil, as the BRIC New Development Bank, the bank for emerging economies, was announced, along with a $35 billion regional fund, $20 billion for infrastructure projects, $10 billion in credit and a $5 billion deal with the country's mining industry. 

While Japan cannot compete with China in terms of investment, it can gain technological advantages by signing deals in the rail and construction sectors, as well as in areas were domestic production is lacking, such as agriculture. 

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