Into Brunei LNG: from broker to investor (1969)

The trading house rewrote what it earns from

The heart of this decision was that a trading house rewrote, for itself, what it earns from. Broking between producer and buyer for a commission — long the skeleton of the trading business — Chujiro Fujino judged to be a way of earning with a visible ceiling. The several hundred million dollars he committed, through sleepless nights and repeated impulses to abort, turned — carried by the tailwind of the oil crisis — into a dividend large enough to sustain a whole year’s earnings on its own. The pattern of winning rights equal to a global major on the strength of sales channels rather than technology became the template for Japan’s general trading houses entering resource development, and passed on to the later Australian coking coal and Chilean copper.

Neither the rights it held nor the swollen dividend, however, lasted forever. As the gas-producing state gained strength, its share was pared from an equal three-way split to 25%, and a strong yen and cheap oil halved the dividend. Even so Mitsubishi did not withdraw from Brunei, and half a century on it has re-invested capital into upstream production itself. From commission to business investment, from downstream to upstream — a trading house’s involvement in resources has continually changed shape to match the host country’s sovereignty and the tides of energy. That long transformation began with Fujino’s sleepless-night decision to join Brunei LNG.