Japan, India to talk energy ties

Japan and India plan talks that may lead to joint investment in oil and gas projects, as well as sales of coal-fired and nuclear power plant technology.

Deputy Chairman of Planning Commission Montek Singh Ahluwalia may meet Japan's trade minister Akira Amari in April, government officials said today.

Closer ties may provide opportunities to Japanese companies such as Kobe Steel Ltd which developed clean coal-burning technology, and Toshiba Corp for nuclear power reactors in Indian market.

"We are keen to enter into India, China, and Vietnam, all of which plan to build more nuclear power plants,"' said Hiroko Mochida, a spokeswoman for Toshiba, which acquired control of Westinghouse Electric Co. in October last year.

Japan and India need to set up a legal framework to allow Toshiba to enter India's nuclear power market, Mochida said. "We are waiting for the treaty to be inked," she said.

Toshiba projected in October a growth of its revenue from the nuclear plant business to 900 billion yen ($7.8 billion) by 2020 from 200 billion yen.

Japan and India were expected to discuss tie-ups in five areas: electricity, energy conservation, oil and gas exploration and production, coal, and renewable fuels, such as solar power, the officials said.

India needs more power plants as the country will probably miss a government-set target to expand electricity production capacity during the Five Year Plan ending March 31.

Expansion fell 37 per cent short of the target of 36,956 Mw, the government said on February 27. Non-state companies will add 1,931 Mw of new capacity compared with a target of 4,899 Mw.

India, holding 10 per cent of the world's coal mines, wanted to build more coal-fired thermal power plants that emit less pollution, the government officials said.

Japan's government has promoted technologies in China, Indonesia, Vietnam and Thailand that produce less pollution from burning of coal at power plants, according to a report by the trade ministry.

"With its big appetite for energy, India is the country Japan should be watching closely," said Toshinori Ito, senior energy analyst at UBS Securities Japan Ltd. "There is a slew of business opportunities there in energy-saving and clean energy technologies."'

In Indonesia, Japan's state-controlled New Energy and Industrial Technology Development Organization, or NEDO, is leading a project to liquefy coal for processing into gasoline and diesel oil with Kobe Steel Ltd.

Kobe Steel had developed coal liquefaction technology and a technique to process low-quality coal with high water content into high-quality fuel that can be burned at a thermal power plant, said spokesman Kenji Hamada.

On Indonesia's Kalimantan island, Kobe Steel had plans next month to start building a $69 million test-plant to improve the coal's quality by deep-frying it with asphalt, Hamada said.

The technology will allow the Southeast Asian nation to boost exports of upgraded coal as demand increases for power generation amid soaring crude oil prices.

Closer energy ties with India will offer other channels for Kobe's technology, while joint oil and gas exploration will assist both countries as competition heats up to secure natural resources.

Japan's government wants companies such as Inpex Holdings Inc, the country's biggest oil explorer, to help boost production from the nation's overseas assets to 40 per cent of its imports by 2030 from 15 per cent, according to the country's energy policy.

Inpex needs to find new projects after last year giving up a controlling stake in Iran's Azadegan oil field, Iran's largest discovery in 30 years, after the country refused to halt developing its nuclear program in defiance of the United Nations.

India and Japan face increasing competition from China to secure future global oil supplies. India imports about 75 per cent of its oil needs, while Japan depends on imports for almost all its oil requirements.

China committed more than $8 billion last year to Nigeria, Angola and Mozambique, according to World Bank figures, to secure access to oil, copper and other resources it needs to fuel its economy, which expanded 10.7 per cent in 2006.

The planned ministerial energy talks stem from a December 15 agreement in Tokyo where Japanese Prime Minister Shinzo Abe and Indian Prime Minister Manmohan Singh said the countries would begin talks to deepen economic partnerships.

Japan and India agreed to increase flights between the two countries to 21 for each nation, the Japanese transport ministry said in a statement after the talks in Tokyo. Japanese airlines operated four flights to India at the time of the meeting, while their Indian counterparts ran seven.

In September 2005, the then-Trade Minister Shoichi Nakagawa and India's former oil minister Mani Shankar Aiyar signed a memorandum of understanding in Tokyo to cooperate in energy projects, including oil and gas exploration, emergency oil stockpiling, energy-saving, and development of hydrogen energy.

The agreement signed by the two sides paved the way for an accord clinched later by the state-controlled Japan Oil, Gas & Metals Corp and India's Oil & Natural Gas Corp. to work together in oil and gas exploration and production.