VZCZCXRO2210
RR RUEHFK RUEHKSO RUEHNAG RUEHNH RUEHVK
DE RUEHKO #1608/01 1020629
ZNR UUUUU ZZH
R 120629Z APR 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 2594
INFO RUEHBJ/AMEMBASSY BEIJING 6567
RUEHMO/AMEMBASSY MOSCOW 1612
RUEHFR/AMEMBASSY PARIS 5422
RUEHUL/AMEMBASSY SEOUL 2640
RUEHFK/AMCONSUL FUKUOKA 0652
RUEHNAG/AMCONSUL NAGOYA 9967
RUEHNH/AMCONSUL NAHA 3106
RUEHOK/AMCONSUL OSAKA KOBE 4180
RUEHKSO/AMCONSUL SAPPORO 1577
RUEHVK/AMCONSUL VLADIVOSTOK 0028
RUEHIN/AIT TAIPEI 6379
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 TOKYO 001608 
 
SIPDIS 
 
SIPDIS 
 
DOE PLEASE PASS TO DOE/PI JNAKANO, DPUMPHREY. COMMERCE FOR 
JAPAN DESK/N. MERCER. PARIS FOR USOECD. 
 
E.O. 12958: N/A 
TAGS: ECON ENRG PGOV PREL JA
SUBJECT: NIIGATA PREF LOOKING TO EXPLOIT ENERGY ADVANTAGE 
 
REF: TOKYO 1296 
 
¶1. (SBU) Niigata is looking to exploit its energy advantage 
to attract new business to the prefecture.  The prefecture is 
Japan,s largest producer of oil and natural gas and the 
country's leading supplier of electric power, which allows it 
to sell electricity at a substantial discount compared to the 
rest of the country.  Niigata is investing in alternative 
energies such as dimethyl ether and also is exploring 
snow-cooling energy systems, wind and solar power generation 
and bio-mass plants.  Nevertheless, it is failing to 
effectively use these benefits to attract new companies to 
the area.  End Summary. 
 
¶2. (SBU) During a visit to Niigata Prefecture in February 
(reftel), econoff discussed energy with the prefectural 
government and paid a visit to one of the prefecture's energy 
companies, Mitsubishi Gas Chemical (MGC), which produces oil 
and natural gas from local fields and converts it into energy 
for local businesses or into derivative products such as 
methanol and formaldehyde. 
 
Niigata Power Development 
------------------------- 
 
¶3. (SBU) Niigata Prefecture, which borders the Japan Sea 
facing the Koreas, produces the most oil and natural gas of 
any prefecture in Japan.  It boasts 52 percent of Japan,s 
crude oil production -- 480,000 kiloliters or 4 million 
barrels in 2004.  (Note: Japan consumes an estimated 5.5 
million barrels per day so this amount fails even to meet one 
day's requirement.)  Its production of natural gas in 2004 
was 2 billion cubic meters or 64 percent of Japan,s domestic 
production. 
 
¶4. (SBU) Niigata Prefecture also is the leading supplier of 
electric power in Japan.  Niigata,s power development, begun 
in 1949, was primarily hydropower.  In 1963 Niigata,s first 
thermal plant began operation, reaching its peak in 1969.  In 
1985 the first Kashiwazaki-Kariwa nuclear plant opened and 
the seventh and last of these plants started up in 1997.  The 
seven Kashiwazaki-Kariwa nuclear plants together produce the 
largest power output in the world, 8.56 million kilowatts 
(kw) or eight percent of Japan,s total.  Currently Niigata 
Prefecture's power generation totals 16.66 million kilowatts 
or six percent of Japan,s total.  Of this, 8.21 million kw 
is nuclear energy, 5.1 million kw is thermal energy and 3.34 
million is hydropower. 
 
Cost Advantage 
-------------- 
 
¶5. (SBU) Because of Niigata,s abundant power, the prefecture 
is able to sell electricity at a discount.  In the areas 
around its nuclear power plants, for example, the charge for 
electricity is discounted by one-fourth to one-half, a fact 
the prefectural government hopes will attract new business. 
 
Niigata Exploring Alternative Energies 
-------------------------------------- 
 
¶6. (SBU)  Niigata Prefecture also intends to become a center 
for clean alternative energy production.  In summer 2007, a 
dimethyl ether (DME) plant will open in the Niigata East Port 
area.  The plant, Japan,s largest, will promote the use of 
DME, a colorless, gaseous, clean-burning fuel produced from 
natural gas, coal or biomass.  By 2010 Niigata plans to 
construct an experimental plant in the Niigata East Port to 
develop gas-to-liquid energy sources.  The prefecture also 
plans to develop diverse industries related to different 
energy resources, including snow-cooling energy systems, wind 
power generation, solar system power generation and biomass 
plants. 
 
Niigata Looking to Stabilize Energy Supplies 
-------------------------------------------- 
 
 
TOKYO 00001608  002 OF 002 
 
 
¶7. (SBU)  Niigata is working to maintain a stable energy 
supply.  The prefecture is exploring for new gas fields while 
using depleted gas fields to store natural gas during the 
summer months for use in the winter when usage peaks. 
Niigata is looking to enhance its pipeline capacity to serve 
its far western border and it plans to diversify risk by 
building a pipeline to the liquefied natural gas (LNG) import 
station in Shizuoka Prefecture.  In 2014 Chubu Electric will 
complete construction of a new thermo plant in Naoetsu City 
that will operate using LNG.  Hoping to become a Northeast 
Asian hub, Niigata is planning new air and ferry routes to 
connect it to Korea and energy-rich Russia, with which it has 
a long history of cooperation.  Niigata has also put in a 
request to the Ministry of Economy, Trade and Industry (METI) 
to establish a petrochemical stockpiling station in the area. 
 
Niigata,s Mitsubishi Gas Chemical 
--------------------------------- 
 
¶8. (SBU) A visit to the Mitsubishi Gas Chemical Co. (MGC) 
demonstrated how Niigata,s oil and natural gas are being 
exploited locally.  The company was established in 1971 in a 
merger between two technology-oriented chemical 
manufacturers, Japan Gas Chemical Co. and Mitsubishi Edogawa 
Chemical Co.  The MGC plant sits on 1.2 million square which 
are divided into blocks for the production of different 
chemicals.  Despite employing 500 workers, the plant is 
largely computer-controlled.  Security guards patrol the site 
regularly, according to MGC Administrative Manager Nariyuki 
Nagaoka.  The coast of North Korea is visible from the plant. 
 
¶9. (SBU) MGC was the first company in Japan to synthesize 
methanol (1952) and ammonia (1957) from natural gas.  Since 
then, MGC has developed many products using these chemicals 
as raw materials.  The company boasts a unique chemical 
manufacturing system, producing not only raw materials but 
also derivative products.  These derivatives include 
commodity chemicals such as methanol, formaldehyde, ammonia 
and urea, which come from the company's own Niigata gas 
wells; specialty chemicals such as hydrogen-peroxide and 
sodium hydrosulfite; and functional products such as 
engineering plastics, electronics materials, and bio-chemical 
products. 
 
¶10. (SBU) MGC continues to explore and produce oil and 
natural gas in the Higashi Niigata field directly beneath the 
plant and in the Iwafuneoki field in the Japan Sea.  The 
company uses the gas produced from these fields as feedstock 
and to produce chemicals in the Niigata plant.  Niigata,s 
natural gas supply should last another 20 years if it is not 
used for power generation.  Chemical production uses far less 
natural gas, allowing the company to extend the life of its 
natural gas fields and maximize profits.  Some of MGC,s 
overseas ventures include methanol production in Saudi Arabia 
and Venezuela.  The methanol is then shipped to the plant for 
the production of chemical derivatives. 
 
Comment 
------- 
 
¶11. (SBU) As home to Japan,s largest source of domestic oil 
and natural gas as well as being a significant producer of 
hydropower and nuclear energy, Niigata Prefecture offers a 
significant power advantage over the rest of the country. 
The prefecture has so far failed to exploit this effectively, 
however.  Neither its Japanese- nor its English-language 
website highlights this fact nor do any of the brochures made 
available to econoff.  Were this to change, the prefecture 
might successfully use this advantage to attract not only 
Japanese but also foreign investment to the area. 
DONOVAN