SAPPORO -- JX Nippon Oil & Energy will partner with Hokkaido Gas to provide liquefied natural gas in Hokkaido, as cooperation between energy companies spreads beyond metropolitan hubs.
The JX Holdings unit will allow the Hokkaido gas provider to use its Kushiro LNG terminal and is also exploring cooperation in electricity sales.
A new company, owned equally by the partners, will be established by April 2018 to oversee the terminal, which began production in 2015.
JX Nippon Oil's usage alone has led to low production rates at the facility. But the company believes it can greatly improve productivity by tapping demand from Hokkaido Gas' eastern Hokkaido operations for industrial users and the utility's arrangement to provide Kitami's municipal gas.
For Hokkaido Gas, the addition of the Kushiro terminal is also meant to stabilize its energy supply to an area often battered by snowstorms and harsh weather. The gas company was previously supplying its eastern Hokkaido customers with gas delivered by tanker truck from its Ishikari LNG terminal in western Hokkaido.
The two companies will also begin mutually supplying LNG to other parts of northern Japan. JX Nippon Oil has a terminal in Hachinohe, Aomori Prefecture, as well.
Hokkaido Gas entered the electricity business after the retail power market was completely liberalized last April. It also is selling liquefied petroleum gas in Hokkaido. JX Nippon Oil, which has already expanded throughout Japan, will discuss cooperation in its Hokkaido operations with Hokkaido Gas.
JX Nippon Oil is also considering how to most effectively utilize the inactive power plant at its Muroran facility in southern Hokkaido.
Cooperation between energy companies continues to spread. In Tokyo, Tokyo Electric Power Co. Holdings and Nippon Gas have teamed up on electricity sales and Tokyo Gas and LPG retailer Saisan are announcing a partnership. In the Kansai region encompassing Osaka and Kyoto, Kansai Electric Power and Iwatani will establish a joint venture to begin gas sales.