Oil Price Surge Lures Japan Traders to High-Cost Energy Projects

Tokyo, June 10, 2008 (Jiji Press) - With U.S. crude oil futures prices nearing 140 dollars per barrel, major Japanese trading companies are moving to make profits from natural resources that they once refrained from exploiting due to high development costs.

Mitsui & Co. <8031> said Tuesday it has reached an agreement with U.S. Oil Shale Exploration Co. and Brazilian state oil company Petrobras to launch a feasibility study for an oil shale development project in Utah.

Global reserves of oil shale, from which synthetic crude oil can be produced, are estimated to total 2 trillion barrels.

Although the break-even point for synthetic crude oil production from oil shale stands at around 80 dollars per barrel, the three companies believe that the operations will be profitable thanks to record-breaking crude oil price surges.

Mitsui and its two partners intend to launch daily oil production of 50,000 barrels as early as in 2013.

Mitsubishi Corp. <8058> said Monday it will launch a feasibility study with its two partners for the production of liquefied natural gas off the Nigerian coast in a low-cost LNG output system that is expected to achieve profitable output even at small- and medium-sized gas fields.

Mitsui, Norwegian venture firm Flex LNG Ltd. and Nigerian oil and gas developer Peak Petroleum Industries Nigeria Ltd. will study the low-cost system as LNG development and production have already started at known large gas fields to meet growing global demand.

With the method called floating production, storage and offloading system, the three companies aim to produce 1.5 million tons of LNG a year if an investment agreement is successfully concluded.

JCN.