Japanese containership operators are taking advantage of their seamanship to enter the offshore oil and gas industry, setting sail in particular for Brazil's presalt layer.
Japanese firms are providing Brazil's industry with floating production platforms instead of ships, with Nippon Yusen KK partnering with Itochu Corp. to build and operate a rig that will produce crude from 2,000 m below the seabed.
That's just one of several projects that are expected to generate ¥340 billion in revenues over a 20-year period, starting in 2013. Another involves Mitsui OSK Lines Ltd., which will lease a floating oil rig to Brazil's Petroleo Brasileiro SA (Petrobras).
The move into oil and gas comes as Japanese shipping firms express concern over their Asian rivals. According to Mitsui OSK Pres. Akimitsu Ashida: "Asian companies are flexing their muscles and approaching us at top speed."
In response, Japanese shipping lines are looking to offshore natural resource development as an altogether new realm for the shipping industry. Nippon Yuesen Pres. Yasumi Kudo underlines the point: "The energy sector is wide-ranging and offers many business opportunities."
Kawasaki Kisen Kaisha Ltd. (K Line) was the first shipping line to start an offshore LNG business, along with its business partner Flex LNG Ltd., a British Virgin Islands firm.
K Line now plans an initial investment of ¥120 billion, with production set to begin in 2014. K Line's offshore facilities can help reduce the costs of production by a third compared with conventional methods using pipelines.
According to a report by Japan's Nikkei business daily, K Line acquired a stake in Flex just before the outbreak of the US financial crisis, and a subsequent plunge in share prices dealt the firm a serious blow.
But K Line did not pull out of the business. "To survive, we had to stay in and differentiate ourselves from our rivals, however long it took," said Hiroyuki Maekawa, the firm's president.
K Line has even set up a special unit to take on more oil and gas business. Called K Line Offshore, the new firm recently won a Petrobras contract for two platform supply vessels (PSVs).
The new building KL Brevikfjord of STX 06 CD design and the UT 755 KL Arendalfjord, which have been chartered for a 4-year period, will commence operations in Brazil this fall.
"It has been our strategy to become one of Petrobras's recognized service providers," said Katsue Yoshida, chief executive officer of K Line Offshore, adding, "With these awards, K Line Offshore will be established in the growing Brazilian market."
According to Yoshida, "We see many exciting opportunities in the years to come, and look forward being part of this development."