TOKYO -- Kawasaki Heavy Industries of Japan has long trailed domestic rivals JGC and Chiyoda in the business of building oil and gas plants. But that is starting to change.
In August, Kawasaki Heavy won a roughly 150 billion yen ($1.44 billion) contract to build the world's first gas-to-gasoline plant in Turkmenistan. It will use new technology from a European company and work closely with its Japanese partner, Sojitz.
The facility will be capable of producing 600,000 tons of gasoline a year and is slated to go online in 2018.
"This will be a project unlike any other seen in the world," said Shinichi Sato, an official at Kawasaki Heavy's plant & infrastructure company. "It involves risks, but we can gain a lot of benefits if everything goes well."
The plant will first induce a chemical reaction between natural gas and a catalyst to extract methanol. The methanol will then be mixed with a special catalyst to produce gasoline. Standard gas-to-liquid refining can generate a variety of products, such as liquefied petroleum gas, light oil and kerosene. The gas-to-gasoline process can produce only gasoline.
There are only a handful of large, commercially viable gas-to-liquid plants in the world, including the one JGC won a contract for from Royal Dutch Shell in Qatar. Sasol of South Africa is also active in this field.
Good first impression
Although Kawasaki Heavy has zero experience with building gas-to-liquid plants, it was able to win the Turkmenistan bid by playing up its collaboration with Sojitz on their recently completed fertilizer plant in the Central Asian country, the largest in the region.
Back in 2009, Sojitz was working on a plan to build a fertilizer plant in Turkmenistan with the help of Japanese lending. But an official at a Turkmenistan state-run company involved in the project told Sojitz Executive Officer Toshiharu Yoshimura the Japanese company's chances of winning the bid were minuscule -- 0.5%, to be precise.
Moreover, Turkmenistan does not offer a government guarantee. As a general rule, the Japan Bank for International Cooperation does not extend loans to projects not backed by a government guarantee. Still, Yoshimura doggedly continued to promote the project, getting the JBIC and Turkmenistan to continue negotiating with Sojitz. Ultimately, he managed to obtain a 50 billion yen loan in exchange for a special scheme that served in the place of a state guarantee.
Turkmenistan was happy with how the project went. As result, the country's state-owned gas company, Turkmengaz, asked Sojitz and Kawasaki Heavy to build facilities to turn gas into liquefied fuel.
Engineers and sales staff at Kawasaki Heavy were delighted, but they also knew they lacked the know-how needed for constructing a gas-to-gasoline plant. The company turned to Danish chemical engineering firm Haldor Topsoe, known for its technology for transforming methanol into gasoline.
Kawasaki Heavy has begun designing the plant, but it faces the challenge of how to get the necessary equipment to the construction site due to seasonal freezing from October through March of the Volga and Don rivers, which are key transport routes.
As such, Kawasaki Heavy has to get all the necessary equipment transported to the site within a six-month window. "It all depends on how meticulously we can manage our schedule and how well we can manage our manufacturing process for our customer," said a Kawasaki Heavy official in charge of the project.