March 18, 2014 6:00 am JST

Japan's Chiyoda seen bagging deal to build US LNG plant

TOKYO -- Chiyoda, a leading Japanese comprehensive plant-engineering company, is expected to clinch a roughly 600 billion yen ($5.85 billion) deal to design and build a natural gas liquefaction facility in the state of Louisiana with American firm CB&I.

     The plant is for the Cameron LNG export terminal being jointly developed by Sempra Energy of the U.S. and Japanese trading houses Mitsubishi Corp. and Mitsui & Co., among others.

     The planned facility would start exporting liquefied natural gas as early as 2017 and boast an annual capacity of 12 million tons. Of this, Mitsui and Mitsubishi would handle 8 million tons -- equivalent to roughly 10% of Japanese demand -- and sell to such clients in Japan as Tokyo-area power utility Tepco.

     Before natural gas is transported by ship, it is cooled, liquefied and stored in purpose-built facilities at export terminals.

     Only five or so companies in the world are capable of building such plants, including Bechtel and KBR, both of the U.S. Chiyoda is a leading player with a track record in the Middle East, Asia and Oceania.

     Chiyoda is not the only Japanese company to seize on demand in North America. In January, JGC grabbed an order from U.S. firm Chevron to build a 1 trillion yen LNG facility in Canada. IHI was awarded a contract last year for the Cove Point LNG site in the state of Maryland and may rake in as much as 350 billion yen.

     LNG plants are planned for such places as Russia and Africa as well. Japanese companies already control 60% of the global market for the design and construction of such facilities.

     Japan has seen increasing demand for LNG for use in fuel-burning power plants since the country's nuclear reactors were taken offline in the wake of the 2011 tsunami and earthquake disaster. The involvement of major Japanese plant-engineering firms in U.S. projects may help Japan secure a stable supply of natural gas.