TOKYO, May 14 (KUNA) -- Japan's JGC Corp. has started developing crude oil and natural gas fields in the US, becoming the world's first major plant-engineering firm to enter this field on its own, a top-selling financial paper here reported Wednesday.
JGC, the biggest engineering firm in Japan, has acquired a 100 percent interest in an oil and gas field in the US state of Louisiana and has succeeded in extracting 1,000 barrels of oil and gas a day -- enough for commercial production --, according to the Nikkei Shimbun.
The Little Lake Oil and Gas Field covers an area of roughly 7 sq. km near New Orleans.
Of the three spots tested by US subsidiary JGC Energy Development (USA) Inc., one well hit a reserve, the newspaper said. The company believes that the profitability of the field will be high thanks to the relatively low cost of drilling and the high quality of the oil there. The field is just 3-4 meters underwater.
JGC hopes to add three more wells by year-end and intends to raise daily production to 5,000 barrels in two to three years.
The investment is estimated to total about JPY 10 billion (USD 96 million), including the cost of acquiring the rights to the site and expenses for this year's test drilling, the report said. Petroleum and gas to be produced will be separately sold to local distributors.
As its core plant-engineering business is facing difficulty securing profit margins because of demand volatility and higher materials and labor costs, JGC hopes to turn its resource exploration operations into a new source of profit and that know-how acquired through them will lead to more plant construction orders, the newspaper said.
It aims to acquire more interests in oil and gas fields in the US and elsewhere.
In Kuwait, JGC and its South Korean alliance has been recently awarded a project to construct Al-Zour refinery, the largest oil production plant in the Middle East.
Copyright Kuwait News Agency 2008.
