ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business

Japan's JXTG weighs investment in Abu Dhabi petrochemical project

Involvement would aid company's bid for oil concessions

An offshore oil platform in Abu Dhabi, where Japanese and local officials are negotiating concession extensions.

TOKYO -- Japan's JXTG Holdings is considering taking part in oil refinery and petrochemical projects in Abu Dhabi totaling 500 billion yen ($4.39 billion), a move the oil major hopes will help secure a spot at the table for oilfield concessions set to terminate in 2018.

The United Arab Emirates' current petroleum refining capacity comes to roughly 1.2 million barrels a day, insufficient to keep up with gasoline and diesel demand amid a growing population and expanding economy. The shortfall has been offset with imports. As part of a push to address these issues, Abu Dhabi National Oil Co. seeks to expand refining capacity by several hundred thousand barrels.

Plans also call for increasing production of ethylene and other basic chemicals used to make plastic. As crude prices continue to slump, ADNOC seeks to improve earnings by boosting production of basic chemicals. The Organization of the Petroleum Exporting Countries and other Middle Eastern oil-producing nations have seen their influence diminish with the emergence of U.S. shale oil. Crude oil is currently trading at $50-60 a barrel after having exceeded $100 a barrel.

JXTG's mass production know-how for chemical products and its Asian sales network make it an attractive partner for Abu Dhabi.

Overseas expansion is also essential for JXTG's growth as the Japanese market shrinks due to such factors as population decline. But considering the scale of the projects, the company is proceeding with caution about the size and nature of the investment.

Negotiations between Japanese and Abu Dhabi officials to extend oilfield concessions set to expire in March 2018 are in full swing. The Japanese oil company Inpex holds concessions accounting for about 40% of Japan's independent crude oil development and is requesting an extension from ADNOC, which owns the fields. JXTG is now working to get involved in negotiations.

Strengthening ties with the UAE is a vital matter of energy security for Japan, considering that the Persian Gulf emirates account for a quarter of its crude oil imports. JXTG Chairman Yasushi Kimura and Japanese State Minister of Economy Kosaburo Nishime will attend the Abu Dhabi International Petroleum Exhibition and Conference beginning Monday. Tokyo is hoping that concession negotiations will pick up steam should JXTG's investment move forward.

(Nikkei)

Get unique insights on Asia, the most dynamic market in the world.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media