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Company Name: CHIYODA CORPORATION
Company Type: Engineering Company
Company Profile
Established challenging to become an advanced engineering company
CHIYODA Corporation was created born with the enthusiasm of Mr. Akiyoshi Tamaki,
who had been a manager of the construction division at Mitsubishi Oil Co., Ltd.
(currently NIPPON OIL CORPORATION at present), which was substantively
liquidated just after World War II. Mr. Tamaki had committed himself to the
creation of an advanced engineering company specialized in industrial facilities
through retaining engineers, in preparation for the recommencement of petroleum
refining business in postwar days. With the support of the senior executives of
Mitsubishi Oil, he established CHIYODA Corporation in January 1948, two years
after the war, with 25 employees. Accepting Mr. Tamaki's strong desire, Mr.
Shigeo Okubo, who had been the president of Mitsubishi Oil at the end of the
war, became the first president of the new company.
Grown with development of Japanese petroleum industry
CHIYODA grew with the development of the Japanese petroleum industry and went
public in 1957. In 1960, the amount of its orders received exceeded 10 billion
yen, and the number of employees reached to 1,400. In 1961, CHIYODA was listed
on the first section of the Tokyo Stock Exchange.
Becoming global enterprise after the entry to Middle East Market
In 1959, when OPEC was established, CHIYODA established its overseas sales
division. In 1962, CHIYODA made an official visit to Saudi Arabia as the natural
gas development and utilization survey team, with Mitsubishi Corporation and
some other companies. In 1963, CHIYODA set up an international procurement
division. In 1966, CHIYODA acquired the order for the construction of Jeddah
refinery (phase I) in Saudi Arabia as its first overseas turnkey construction
project. The project was the pioneer of CHIYODA's projects in Saudi Arabia,
which led to receiving subsequent orders, such as construction of Jeddah
refinery (phase II), construction of Riyadh refinery (phase I & II), and Yanbu
refinery (1980). In 1970, the value of its orders received exceeded 100 billion
yen, and the number of employees reached to 2,700. In 1980, the Iran-Iraq War
occurred suddenly, and the crude oil price skyrocketed to $30 to 40 a barrel.
For three consecutive years from 1980, the value of orders received rose to the
350 billion yen level, and the number of employees reached to 3,500. In 1983,
CHIYODA achieved record high earnings before tax at over 50 billion yen.
Challenge for diversification
In 1984, the value of orders received sharply declined to about 150 billion yen.
Due to shrinking of the Middle East market, CHIYODA started diversification in
its business field in the domestic market, such as new entry into the
non-hydrocarbon field such as general industrial facilities. CHIYODA increased
its subsidiaries and affiliates up to 51 in 1999. During the 1990s, the Asian
economy grew rapidly and the Southeast Asian market perked up. However, during
that period, Korean companies, which had technologically caught up with Japanese
companies in the refinery and general chemical plant field, entered the market.
This entry raised tough competition and, therefore, profitability from each
order received deteriorated. Although the entry into new business fields had
achieved some positive results, that could not dramatically change the overall
performance of the company. CHIYODA posted an operating loss in 1997, when the
Asian currency crisis occurred, and continued recording losses for six years in
a row until 2002.
Implementation of financial restructuring plan
Since 1998, CHIYODA has promoted overall business restructuring backed by
management support of Bank of Tokyo-Mitsubishi, Ltd., Mitsubishi Corporation and
Kellogg Brown & Root (KBR), a major US engineering company, with which Chiyoda
has an alliance in introducing ethylene production technology. The activities
included financial restructuring such as allocation of new shares to a third
party, reduction of capital without compensation, debt relief and other
measures, and the number of employees has been reduced to 1,100. Since 2001, Mr.
Seki has led the new management team as President and CEO (56 years old at the
time of promotion) and has been implementing the restructuring plan to eliminate
loss carried forward by March 2006. The restructuring plan includes the
following features; (1) redefinition of the business domain, (2) right-sizing of
work force, (3) fixed expense reduction, (4) restructuring of group companies,
(5) strengthening business promotion, (6) improving company quality through
business alliances, (7) financial restructuring. CHIYODA posted an operating
profit in FY03/2003 and, as of the end of September 2003, reduced the loss
carried forward, which once reached to 100 billion yen in 1998, to 3.8 billion
yen. The number of subsidiaries and affiliates is reduced to 27. (The figures
above are non-consolidated ones.)
Expansion of natural gas related market
In 2000, international oil majors that had experienced M&As started massive
investment into the natural gas related field as it was recognized as a clean
energy source. The crude oil price remained high and heightened concerns for
environmental protection backed the movement. This movement led to the expansion
of LNG plants and, more recently, a much broader gas-value-chain market. As
CHIYODA has made a number of accomplishments in the LNG market since 1973 when
it undertook construction of an LNG plant in the United Arab Emirates as the
first Japanese company in the Middle East region, the expansion of such a market
enabled it to drastically change its business. At present, the LNG plant market
is an oligopoly occupied by four major companies. CHIYODA is one of them and
occupies about 30% of the share.
About Company
Chiyoda constructed the Mizushima LNG receiving terminal for Mizushima LNG
Co., Ltd.
The Mizushima LNG receiving terminal received its first cargo on January 16,
2006. Transfer of LNG to the terminal was completed on January 22 with no
problems. The terminal was certified for commercial operation on March 31.
Mizushima LNG Co., Ltd. is equally owned by The Chugoku Electric Power Co., Inc.
and Nippon Oil Corporation. The terminal is located at the Mizushima refinery of
Nippon Petroleum Refining Co., Ltd., which is in Kurashiki City, Okayama
Prefecture. Commercial operation began on April 1, 2006.
The Company plans to receive about 600,000 tons of LNG each year. Gas will be
sold mainly to the Mizushima Power Station of The Chugoku Electric Power and to
a nearby city gas company.
In 1969, Chiyoda participated in the construction of Japan's first LNG receiving
facility, the Negishi terminal of Tokyo Gas Co., Ltd. Since then, we have taken
part in the construction of about half of Japan's LNG terminals. At Mizushima,
we received a lump-sum, full turnkey contract for the first time. We handled
everything from engineering and procurement through construction and
commissioning. The experience and know-how gained from this project give us
valuable assets. We intend to use these resources to participate in the LNG
field in more ways, including planning, operations and maintenance.
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