GTL uses natural gas as feedstock for producing petroleum products such as naphtha, kerosene and gas oils through a chemical reaction. South Africa's Sasol and major European and U.S. oil companies are pursuing commercial projects utilizing GTL technology. Liquid fuel produced through GTL is considered to be a clean source of energy with less environmental impact since it does not contain sulfur and aromatic compounds. This technology could also become a source of new liquid fuels leading to a diversified energy supply because natural gas is used instead of crude oil as feedstock.

Combining Our Technological Capabilities for Commercialization

From 2001 through to 2004, JAPEX collaborated with the Japan National Oil Corporation (JNOC, currently Japan Oil, Gas and Metals National Corporation: JOGMEC) and four private-sector companies in a 7 b/d GTL pilot test at the Yufutsu oil and gas field in Tomakomai City, Hokkaido, which was successful. JAPEX subsequently established the Nippon GTL Technology Research Association in October 2006 with five other private-sector companies and commenced demonstration research on GTL technology with JOGMEC. The development and demonstration of Japan's own GTL technology as a competitive force on the world stage is the result of bringing together the financial and technological capabilities of the Japanese government and private sector to establish a research association that engages in joint research with JOGMEC. In 2007, the Nippon GTL Technology Research Association commenced construction of a 500 b/d demonstration plant at a site owned by our subsidiary Japex Offshore Ltd. in the Niigata Port industrial park; construction was completed in April 2009. The Association is currently conducting demonstration tests, scheduled for conclusion in fiscal 2012, and is working toward developing GTL technology at a commercial scale of several tens of thousands b/d, which would be competitive from both the technological and economic perspectives.

Establishing Japanese Proprietary GTL Technology

The GTL technology currently leading the global market requires oxygen and in some cases also requires the removal of CO₂ contained in natural gas feedstock. The technology being developed for commercialization by the Nippon GTL Technology Research Association adopts a different approach in that it uses the CO₂ contained in natural gas without the need for oxygen, and therefore does not require an oxygen plant or CO₂ removal. This reduces capital expenditures and operational costs and is thus considered to be fairly competitive in the global market.