Nippon Oil to Construct $548 Million LNG Receiving Terminal at Hachinohe

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Leading Japanese refiner Nippon Oil Corporation (TYO:5001) (Tokyo) has announced plans to build a new liquefied natural gas (LNG) receiving terminal at Hachinohe, located in the country's northern prefecture of Aomori. Construction of the $548.4 million terminal is expected to begin in 2011 and be completed in 2014-15.

Nippon Oil plans to utilize the terminal to receive LNG from Indonesia and Malaysia for onward supply to its customers in the Tohoku region in northeastern Japan. Nippon Oil holds stakes in the Tangguh and Bintulu liquefaction facilities, located in Indonesia and Malaysia, respectively. In 2007, Nippon Oil completed the development of the Hachinohe satellite terminal. Since then, the company has been supplying LNG to the Tohoku region. The new terminal is expected to cater to increasing industrial demand and expand the firm's customer base in the region.

The new terminal will have a 160,000-kiloliter tank. The capacity far exceeds Nippon's existing 4,500-kiloliter tank facility at Hachinohe. In association with Chugoku Electric Power Company (TYO:9504) (Hiroshima, Japan), Nippon Oil operates a 160,000-kiloliter tank in the Mizushima complex at Kurashiki in the Okayama prefecture. There are plans to build another facility of the same capacity in the complex.

In a related development, Nippon Oil signed a heads of agreement for LNG supply for 15 years with Chevron Corporation (NYSE:CVX) (San Ramon, California). The agreement, which will come into effect in 2015, will ensure the supply of 300,000 tons per year of LNG from the Gorgon gas project in Western Australia. The company has also begun preliminary studies in association with Hokkaido Gas Company Limited (TYO:9534) (Hokkaido, Japan) for the construction of an LNG terminal at Kushiro. Feed for this satellite terminal will come from the Ishikari or Hachinohe terminals. Hokkaido Gas is constructing the Ishikari terminal.

Japan is making a conscious effort to transition from oil, coal and other fossil fuels to environmentally friendlier alternatives. LNG is emerging as a popular choice for industrial users in the country. According to the Statistical Review of World Energy 2009, published by BP plc (NYSE:BP) (London, England), Japan purchased 92.13 billion cubic meters of LNG in 2008, becoming the world's largest LNG importer. The country has 26 LNG importing facilities, with combined total capacities of 1.4 billion cubic meters.

According to Business Monitor International (BMI) (London), Japan is not expected to witness a surge in LNG demand in the near future because of the global economic downturn and the country's deteriorating domestic economy in the past two decades. In 2009, energy demand in the country slumped because of a decline in industrial output and a global fall in demand for Japanese products. In October 2009, Japan imported 4.8 million tons of LNG in comparison to 5.6 million tons in October 2008. However, energy companies are optimistic that in the medium and long terms, LNG demand will grow substantially. BMI forecasts that demand for LNG will improve in 2010 and is expected to reach 101 billion cubic meters by 2014.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.