Japanese Oil and Gas Firms Make Their Move Into Alternative Energy

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Researched by Industrial Info Resources East Asia (Kofu-shi, Japan)--Oil and gas companies in Japan could find their alternative energy-based subsidiaries in advantageous positions, as the country appears to be staying the course to the reduction of nuclear dependence. Last week, Prime Minister Naoto Kan, after previously pledging Japan to the continued use of nuclear energy after March 11, announced that nuclear energy would be phased out in steps, aiming for the long-term use of renewable energy and smart technology. The government has yet to disclose the details of the phase-out, only that it will occur in three steps. A breakdown of the future energy mix has yet to be released as well, however renewable and alternative energies will become a primary pillar of Japan's future energy strategy.

Idemitsu Kosan Company Limited (TYO:5019) (Tokyo), which has been involved in Japan's small geothermal energy industry since the late 1970s, is planning to expand its renewable energy venture with Inpex Corporation (TYO:1605) (Tokyo). Both companies are involved in oil and gas development projects in a number of locations, however they plan to cooperate in several surveys to determine the geothermal potential in two areas of northern Japan, with plans for development if the survey findings are positive. Up until now, geothermal energy has remained untapped for the most part. Concerns over cost, seismic aggravation and aesthetics have stopped most Japanese companies from boosting capacity, while other Asian countries steam ahead.

Solar Frontier, a subsidiary of Showa Shell Sekiyu K.K. (TYO:5002) (Tokyo), is poised to become a leader in solar panel manufacturing in Japan. Solar power is marked for heavier development in Japan, as residential solar is expected to grow in the near future. Solar Frontier announced last week that its flagship plant in Miyazaki prefecture had begun commercial operation. The company is also aiming further afield by expanding into the global market. Solar Frontier panels will be utilized in one of Saudi Arabia's first solar power stations scheduled to break ground next month.

Other energy companies, like Tokyo Gas Company Limited (TYO:9531) (Tokyo), are buying shares in renewable energy-based generation companies in order to diversify their business and fulfill Renewable Portfolio Standard agreements. Tokyo Gas, which is also involved in the development of hydrogen fuel cells, is participating in the operation of two windfarms in northern Japan.

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