Hitachi, Toyo Enter LNG Market Through Small and Medium Gas Fields in Papua New Guinea

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Researched by Industrial Info Resources (Sugar Land, Texas)--The government-run Japan External Trade Organization (JETRO) (Tokyo, Japan) has engaged Hitachi Limited (TYO:6501) (Tokyo), engineering company Toyo Engineering Corporation (TYO:6330) (Tokyo), and plant equipment manufacturer Chart Industries Incorporated (NASDAQ:GTLS) (Garfield Heights, Ohio) to conduct a feasibility study on small- and medium-sized natural gas fields in Papua New Guinea. With this, Hitachi and Toyo Engineering will foray into the global liquefied natural gas (LNG) market. The partnership intends to focus on the abundant small, undeveloped gas fields in Indonesia and Australia.

According to Japanese newspaper Nikkei Business Daily (Tokyo), Hitachi will supply the venture with power control software and rotating equipment; Toyo Engineering will design the plant, procure the equipment, and construct and manage the projects; while Chart Industries will supply the projects with technologies to treat LNG, as well as the equipment for chilling the liquefying natural gas. The three-way alliance will set up plants that can produce about 2 million tons per year of LNG.

While Toyo Engineering has long been keen to enter the global LNG market, Hitachi has been interested in making use of its technology in power generation and power control systems in other sectors, such as gas and petroleum production. The small-sized plants that the alliance seeks to set up generally cost 20% less in terms of construction and are usually complete and ready for operations within three years in comparison to the four years required by the larger plants. Australia and Indonesia have a number of undeveloped small- to mid-sized natural gas fields, where it would not be economically viable to develop large plants. Several large LNG plants set up in the recent past have cost millions of dollars for development, and costs have been known to exceed $10 billion. The production capacity of large LNG plants is usually 5 million to 10 million tons per year. Engineering and construction companies Chiyoda Corporation (TYO:6366) (Yokohama, Japan) and JGC Corporation (TYO:1963) (Tokyo) are two of the largest players in the global LNG market.

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