Sumitomo Corp, Nissho Iwai plan to form LNG alliance<\/p>\n
TOKYO (Reuters): Japanese trading houses Sumitomo Corp and
\nNissho Iwai Corp on Wednesday announced an alliance in the
\nliquefied natural gas (LNG) business in a bid to tackle
\nheightened global competition.<\/p>\n
The firms said they will set up an equally owned LNG joint
\nventure, whose capital has not yet been decided, on October 1.<\/p>\n
\"The importance of the LNG business is growing, and projects
\nare becoming bigger in scale. It is difficult for us to undertake
\nthese by ourselves,\" Shiro Yasutake, president and chief
\nexecutive officer of Nissho Iwai, told a news conference.<\/p>\n
It has become harder to compete with foreign oil giants for
\nstakes in overseas LNG projects, he said.<\/p>\n
The move is the latest in a series involving Japan's trading
\nhouses, which are known for handling wide-ranging merchandise
\nfrom noodles to satellites.<\/p>\n
With more Japanese manufacturers venturing out on their own to
\nprocure goods, trading houses have found their once-cosy role as
\ninternational middlemen undercut, forcing them to undertake
\ndrastic restructuring in the face of global competition.<\/p>\n
Since the bursting of Japan's asset-inflated bubble economy in
\nthe early 1990s, trading houses have seen their profit margins
\nplummet, with sluggish consumer spending and deflationary
\npressure taking a bite out of sales.<\/p>\n
Nissho Iwai has stakes in LNG projects in Indonesia and Qatar,
\nbut the alliance would mark Sumitomo's first entry into the LNG
\nbusiness, company officials said.<\/p>\n
Nissho Iwai is the second largest LNG supplier in Japan,
\nhaving a market share of about 27 percent, second only to
\nMitsubishi Corp It imports LNG and sells it to Japan's power and
\ngas utilities.<\/p>\n
Nissho Iwai has been supplying about 15 million tons of LNG
\nannually to power and gas utilities in Japan, the world's largest
\nLNG importer.<\/p>\n
About 100 employees from Nissho Iwai and 10 from Sumitomo Corp
\nwill be transferred to the new venture, company officials said.<\/p>\n
Sumitomo Corp's executive vice president, Naoki Kuroda, said
\nthe new firm will be seeking stakes in overseas LNG projects.<\/p>\n
Nissho Iwai's LNG sales for the year ended in March amounted
\nto about 469 billion yen ($3.82 billion).<\/p>\n
Industry sources said LNG demand in Asia is set to grow
\nbecause the fuel emits relatively low amounts of carbon dioxide,
\nwhich is believed to contribute to global warming.<\/p>\n
Slowing economies in Asia have also earnings of Japan's giant
\ntrading houses, adding to the woes of an industry that is
\npainfully exposed to Japan's slumping property market and
\nbuckling under the weight of excessive diversification.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/sumitomo-corp-nissho-iwai-plan-to-form-lng-alliance-1447893297",
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