JPRS ID: 9810 JAPAN REPORT

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• Sequence Number: 49
• Content Type: REPORTS

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JPRS L/9810
25 June 1581
Ja an Re ort
p p
cFO~::~~~s~~
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. JPRS L/9810
25 June 1981
JAPAN REPORT
(FOUO 38/S1)
CONTENTS
- ECONOMIC
Trade Friction, Japan's Distribution Systems Discuased
(Sueo Sekiguchi; JAPAN EOONOMIC JOURNAL, 26 May, 2 Jtm g1).~~~~~ 1
~ SCIENCE AND TE(HNOLOGY
- Energy Development, Conservation Pro~ects Reviewed
( Various sources, various dates)......~ 6
Alternative Energy ~upplies
, Ene~gy Budget
- Oil Shale Exploitation
Technical Cooperation
Biomass Energy Pro~ects
Oil Exploratory Drilling Pro~ects
Underground Oil Stonage Plan
Oil Conservation Target
= LPG Stockpile Plan ,
= Feasibility Study on Sites
= Oil Import Goals
= Petrochemical Industry
= Cooperation in Oil Industry
In terviews With Energy Q1iefs, Taro Nakayama, et al.
; In te rview
- Interview With Committee (lzairmany Hikaru Matsunaga Interview
~ Coal Use Policy
Continental Shelf Exploration
_ Geothermal Pawer Generation Plant
Continued Growth Expected for Electxnnics Industries
(NIKKEI ELECZ'RONICS, 13 Apr 81) 48
Computer Industry, by Kiyoshi Otani
Electronic Medical Equipment, by Shigenori Miyata
- a - [III - ASIA - 111 FOUO]
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Electronic Measuring Devices, by Junich~ Ogin~ ,
Communicationa Equipment, by Hisaahi Asa~
Electronic Parts Iaduatry~~ bp Shimei Matauoka
Semicoaductor, Integrated Circuits, by Takahide Nonaka
Use of Robots in Industry Expected Zb Increaee
_ (Katsuhiko Hireao; JAPAN EOONOI~IIC JOUItNAL, 26 May,
2 J~m 81)-==.~ 73
Government-Industry Opto--Electronicg IC Research Due
(JAPAN EOONOMIC JOURNAL, 2 Jua 81)d 77
Machir.e Tool Builders Pla.n To Gq Into U.S. Production
(JAPAN EQONOMIC JOUIt~TAL, 2 Jun 81) . o 78
East Gennany Bids To Buy Rpbot From Fu3itsu Fanuc
(JAPAN E00:10MIC JOURN~,4L, 2 Jtai 81) 79
Amada Will Sell F2i Systeme Aimed at All-Out Automation
(JAPAN ECO~TTOMIC JOURNAL, 2 Jim 81) 8Q
Plastic To Be Used To Package Radioactive Wastes
(JAPAN ECONOI~IIC JOURNAL, Z Jun 81) 81
-b-
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ECONOrQ C
TRADE FRICTION, JAPAN'S DISTRIBUTION SYSTEMS DISCUSSED
Tokyo JAPAN ECONOMIC JOURNAL in English Vol 19, No 956, 26 Maq, No 957, 2 Jun S1
pp 19, 20, 24
~Article by Sueo SekiguchiJ
~26 May 81 pp 24, 19~
~ Text]
It haa often been claimed that United States and the com The defenses put up by the
distribution syttema ia Japan fortable surplus in Japan's JF~anese � against foreign
differ rKldely irom thase in ~~t ~~~tiont balance. criticiam alao lacked true per.
Weatern cotmtrles and that the ~ J8~ yv~ ~ ~ivenees as they were not
difterence haa prlmarily been big deficlta in its c~ai~ent trans- baclced by oonvincing data.
the obetacie blocl~ing eatry oi ectione balance in tl~e 1890-e1 Distrlbutioa systema compriae
forel~ produda iato the Japa- period, critlcism againat only an iasi~ificant section in
nese market. No ~cacE Japaa's distributioa systesns economic t~ctbooks and there
economic analysis, however, ~~e or l~a died doam. have aever beea enough posi-
haa been conducted on the ~ether a count ia tive atudies of the wb ect.
actual nature of deficiencies, if rY j
any, of the Japaneae dis~.ibu- ~~8 up , fat surpl~ or Major cesea of critirasm
tion systems. Proi. Sueo Seld- ~~6 ~~ts in ita curt~t. agaimt Japanese diatribution
guchi of Oaaka University ~8ctiaaa balance, horvever, policy do not u~ude such
addr~ thit aexious over- 0�8b~ t� b8w Qothing to do with government-to-government
si~t in the following article. ~t ~'sY~s d~sMbutioa sya- prpbiems aa Nippoa Telephone
tein. It must al~vaye be import- & Telegi~aph Public Corp.'s
W~st~m criNei~s ant governmenr poHciee to pcocurement, althottgh they
Whea Js e g channd Bood 9ualitY, low- have much to do with Ja ne.~e ~
pan ajoyed bi st~- Pe
pluses ln ita current trans- Pnced canmodities to con- disiributlon policy.
actfone balaace in 19?8 aad sumers wheth~r the com- Foreign criticiama can be
1979, the coimtry was subjected modides are from dbmestic `catalagued" into two major
manufacturers or the~lr forei n
to a seriea of atrong criticism.a ~ Broupe: . cartela a:~d import
from Westet7n countries, regulations ahich have direct
especially the United Ststes, Foreign critics were otten effecta on imports, and 2)
that Japan's import and misinfarmed when they "at- domestic distribution pollciea
domeatic distribution systema Japan for its "complex" which have indirect efiects ofl
were preventing loreign pcod- ~~~n systems. One of the imports.
ucts !rnm entering the Japa- mo6t glaring mistakes oom- . Tt~e preseat state of Japanes~
~e ~.k~, g~ mitted by foreian critics was , distributioa syatema and
however, was primarily fueled th~e claim that Japan's "con- regulationa as wdl aa how per-
by the panic Weptetners felt valnted" diatribution sysbems tlnent foreign crlticlsms are to
about the serioua trade im- ~~s~~~ ~~P~'~~ ~n- � the future improvement ot
balance betwee~ Japan and fhe ~~e~� . Japan's~ distribution systems is
~ aasessed below.
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FTC'a Gaidances ot Foreiga Supplien to Alter 3ole Ageacy Coatnets ~n F4cal 1978
~ RMhitti0nf a~ klifrlttlOM On
. Base mate� CMCk ~ ~~I~
CaM ~ S~~~s W n~ls�p~r1s Sh~re
tonfrlcts T~cM. Con~Wnnp prOCUnnO S~I~f 'R~~S~I~ W1r~llri aflKi O1M~f To41 lK)
Bus~nesssKta 9u~4~ revfston P~OdY~h f0~+�K chanMls prlcM 0a
~y 1 9 ~0 � 1 S I6 1]0 96.~
h4nuf~tlvrln0 99 ~ s ~ 17.0
Raod 20 1 S ~ ~ 1 ~ 7.0
T~xtil~................... ~ ~ 1 1~ 9.A
e i ~ ~ z ~.s
ch~micab + ~ ~
On�ca1 ~ ~ ~ ~ ~ 10 7.~
RubbK�I~a/Mr S ~ ~ 7 1.S
Ce?amla, tay i s1an~ ~ ~ ~ 1 ~ 2.~
M~f~N 4 ~ ~ ~ 74 1~.~
Gen~~~l m~chfr�rY ti b 1 14 !.9
I ~ ~ ~ n 16.~
Pncl~lon mKhln~ry 10 ~ ~ 7 ~ Z.Z
Elicblul machinwy 17 2 1 ~ 11 10.~
� TnnsD~ machin~rY ] s 1 Z > > > l.Z
Ottwn ~ ~ ~ ~ s , i.s
servic~ u t s ie us ioo.o
01Mrs 1 ~9 ~ 9 ~6
Tofal ....................10> >
Shar~ lKl 2.7 7~.7 0.7 6.7 4~.7 9.~ 0.T 7.7 17.? 100.
� p~~~ Rrp~yt tor lY/9 by 11~e Fal~ Tr~de Gommis~lon
- 1t muat be reiterated in this factunrs achieve pheaomenal It ia highly diffi-
connection Wat dietributioA tecMeb8ical advanoas, cu~ ~t t~~ judge whetber A Com-
policiee ahoWd be implemented b~ack heavily on thdr peodac- ~y in an enterpriae grouP
on their own merita and never tion ca~ts and lift import coo- ~ really sacritice its own
for the purpose of manipulating trols. long-tam pcoCits by refraining
a country's foreign trana- � ~e~~ ~ from unportin6 competitive
actions balance� Such wock highly lik~ely . to breed neav p~eta from foreign auppliers
should strictly be res~?ed tor protective maa~a'e;� A tYp~cal for the aake oi B Company In
forei~ exchange polictea. . case in point fs raw ailk and ailt the same eaterpeise Btoup. It is
~ products. Ip4poct controla on ~~Y ~ible, however, that
AMi.nc~ssion carhls raw sWc have now gi'owct to ~~ti~ ~ a~~ enter-
� The annual report for flscal cover all silk pcoducte. ~~P W{g ~~tifice short
1979 bY the Fefr 'hade Com- What will happen if no ~ profits tor the sate of
m~~~ g~ws ~t ~ pcotective measures are takea lon term solidarity and
for the ol induatry? Pheaol m~uel cooperation among
ace a"considerable ntnnber ot m~ ~~~bly be
anti-receesion cartels forced to cut back tlt~h'produc- ~~~~~8' T~e �~8~�~e of
existence in Japan and that presidents' meetinga in
Japau ia � rsther permis~ive of fion but pheaol usa~a are likely virtt~aUy all of the enterprise
to h$ve a loc~er lease on lite. sn eats this
such cartds. Tha cartel in the atronglY 68
phenol indt~atry is only ooe at ~~N ~p possibllity.
the typical examplee. Domestic ~ I~uu order to break down such
maauiachn~ers in tt~e pbend F.nterPrise gi'o~P u'? Ja ~~cit import bsseiera� not
induatry are permkted under have oftea been accused of ~ioaed by the government,
the cartel to jdntly control bceedin6 ItdPUei~ but simil~u' bolstering of the Anti-Monopoly
importa. What are t1~e exad import watrola as users of Act ~/and direct entry of for-
economic effecss of such a csr� some commodities ia aa ~enter' ~anufacturers and ex-
tel, then? priee grouP are often morally ~e Japaneee mar-
Pheaol manutacturers them- prohibited from acurrying k,et ia mandatory�
selves can of course eajay com- towar~ low.prlced imports If
~ parativaly high prices for their the aame commodities are Dir~ct inv~tm~nt in Japan
pcoducts becauae of the protec- available, tbough at h~~' Ja~~ ~~rations have
tive effects of the cartel� costs, from member corpora- ~ade aggtr.asive advances into
Phenol users, on ttye other uons of th� same gi'oup. ` forei n markets on_ the
hand, have to bear the adverae Whether We accusation is g ~{~ie Japanese
effects (hlgh ~rices) ot the warranted cannot easily be afrenSth erful expoct
cartel and will eventually need determined~'however, as there Gc~ve~e�t' ~p ~hi~ lasted
is not yet enough positive data pcomotion po Y~
their own anti-recession ~ lggpb.
cactel, unless pbenol manu- on t}~e true Eunctions of enter-
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It is only fr~n the middle af upon the Anti-Monopoly Act barr{ers and wide socia! and
the 1970s, however, that Japan aad are later subjected to d(fferences between
liftod controls on direct foeel~ alterationa (see acrnmpanying Japan and Western countries.
investments lato this sector of table). Moat frequent Infringo- The American Chamber of
induatries and tnarket. Japan meata 1f1CIU~ OOA~POIS on Canmerce in Japan, however,
should. theretote, a~nit that handling of competin~ has made a highly interesting
_ Forei~ corpocations are ~t a ~roducts, coprrols oa aalea r~velation on this subject (in its
great dlsadvaatage in aeWn~ channela, resttictiona on resale white papec on Japan-U.S.
their products in Japan. pcicea aad grohibitlon of im- trade for 1979). The profit rate
Although controls on direct tor- ports from competing aourcp of overseaa subsidiaries of U.S.
elgn inveutment~ In Japan~ (parallel imparts>, corporations is nowhere higher
srarted in 198T, it toot some 10 What dleMbuqon policies than in Japen, according to the
long y~ars tat thE acNoa to should Japan tAke in the tl~ture, ACCJ. This report suggests
come full clrcle in Sve well- then? First ot all, Japan ahould that foreign ca~wrations' in.
~ spaced waves. Distributton cut bad~ as much as possibie oa ~ Japan are likely
aectors were amoag tbe la~t to import cartels and other import to be amply rewarded eooner or
see investment controls liPted. restrictiona. Secoad, It should Iater, although the initial costs
Many Wesiern oorpocatlona never block forei~t corpota- may look forbidding.
may now be tieeiFatirig to tions' direct investmeats ia the
~ commit themselves fully to the Japaneae distribirtioa sectora. DiK~iminatory polki~s
Japanese maritets in their be- Domestic competitora will Foreign producers of mono-
liet that inveatmeat rekurns will na~lly ~ a~W~ t~e
not be big enough for the sizes of en of faei Po~ac products, on the other
ti'Y Bz1 ~'Poratior~s hand, oftea establish sole sales
financial commitmeats they into the Japanese marlcets,l?~e a~~ ~ Ja n and follow
will have to make. Their Japane~e Goverament, how- ~
hesitation ma onl be natural h ghly discriminatory mar-
Y Y eve.t, should ataad firm and keting policies. The Fair Trade
in view of the serious language work for diacoura~ng such Commission reports that many
obstructions. sole aae~t contracta infringe
~2 Jun 81 p 20J '
~Text~
Ultra-small r~toil~n CYeating effective marloeting sider efficteacy imprnvement
systems is of utmost im- in distMbution in terms of
It has~ long been claimed that portance regardlesa of the. enSineering such as oomputeri-
Japanese distribution syatecns origin of the caamoditlea ~ zation aad so on. The true
are inefficient. Wlmi are the handled. Among toreign problem involved, h~wever, is
actual data behfnd such a oon- critlcisms agatnst Japan is tbat whether effective ooe~tpetition
tention? Oae obvious yardstick distribnt~on anar~ns in Japan is in force or not in t6e distribu- ~
is per ~nployee e~etail sales. are e:borbitaatly W~ and that tion sectors.
According to A Textbook on tl~s fact is 6aving crippling The three moat serious
Dt~tributton edited by Yosui- effec~s on ooneumer demande. problems now troubling the
hiro T~jima, P~' ~Pb3'ee 1f the "higlt margina" are Japaneae distrlbution aystems
retail sales in Japan were only applicabie to both dom~stic aad are: 1) pcot~cfive meaaures far
siiQhtly higher than ~ 4 million foretgn psoducts alike, ~ there oottage-level, extremdy inefS-
in 1972 as compared with ~ 12 are no discriminating e~ects oa clent retailers, 2) atrong ver-
mlllion in the Unl~ed States. ~ ferei~ products. If Japanese tical af[iliations -of sales
The per employee w6olesale' authorities are torcing Japa- chanaels and competition-
amount, on the ott~r haad neae eales agests on for+eign natrictive practicee by dnrable
stood aE ~38 million in Japan corporatio~s brioging tbeir goods manutacturers, and 3)
as againat iF 52 million in the prodxts into Japan, bowev~r, lack of efficiency improvemeat
United Statea. T6e compara= that constid~te~t ~imination. efforts in the highly compleac
tively high wholesale amount us against fo?e~gn corpocatlons, aud multi-layered whol~sale
Japan is primarily due to t}ie For a lopg time, Japan6se sectors.
- existence of sogo shoaha, ~scholars in cummerce and the Altbough cottagelevel retail
PoWerful Senet's1 t~'a~n8 com- Interaatioaal Trade ~ lndustry est~ablishments are now
P~~� Mlniatry l~ve teaded to coo- ;~otected by spedal govern-
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aware of this fact, the Fair qs to ~om lex and arcane
_ ment measures, they will at ~~~sgi~ ~ 1980 p
- leasi for some time be allowed a W~~ ~~e wholesale systems in Japan,
- to exist because of unique eco- of a rt enuuai no rash judpnent seems
nomic. raechaniama aow at warranted. 'l~ere may well be
"Vertical A:tiliatiou of Distri- ~ where iater-wholeaaler
work in Japan even if the pution and the Antl-Monnpoly
prntectian ia lltted im- � trantactlons contribute to
medlately. As long ai the Japa- ~g ~dec the waraing ~~�tioa ot prica. If wch
neae contiaue to live ln whole~ak syetems are Mily
reladvely small houae~ snd u~e are nsale price meinteuance uaaonomical in net~ae sad
mldget refrigeraWre, t6ey wW P'ectices (outri~t vlolation of 1~ave nothiag to compenaate for
We Anti-Mouopoly Law), a~e- i new a~trants wlll be in a
heve to keap on maltWg sma11- s ~ tollowed
lot purchasea at neigdborhood ~ poeitioa to iuaugurate tbelr own
retcille~rs, especially wbea mast ?~Y new eatrants and lowly- direct distrtbution
wives do not lwld regtilar iobs ranked manuiadura~s and ~ bY.eWninatiag all the
and stay at home. ~ g~' ~e intervening. distribution
th~ the suPNY side~ aome latter two bdaoQ to a cAtegory Coca-Cola bottling
- small retailers wlll continue to `~ch ia ia violatioa et tbe law ~p~~~ ~ 8~tter of faM,
_ exist agatnat the tide ot ~~~iae all0~ have made a hu~e succeea out.
whece either aew entran~ oc of their own independent distri-
modernizatioa aa many part- ~ ~ ~d ~ aystems. -
time tarmera still exist. As long ~d ~~~~,y,
as they hold precioue. la4d (for ~~~~y ut1M poaiNv~ anal~rsis
which they ' expa:t mouatinQ ~~~yste~, howeve~.~
pricea) and eaotigh apare work- ~~q~ not be ~pt pollcy conclusions
~ Force in the form of family ehodd oee ctraw from all the
workera, part-time tarmera y~ ~ abm?e Eacts, then? One obvious
_ have e~ough reawa to atidc to ~ are liloely to be iae~ilized caacltnien ia. that ihe Govero-
runniug small stores as a side ~~~ed of oot~umeci. m~ ~d za!ever ~sily sanc-
job at least for aome more time. oy~ u0� ~~�~b
The Ja eae Governmeat a~�~S y
has long res~tricted salea floor O
a~~qohni~in ,iapa~wedit~id d4mestic iadusbries. Nwther ia
expansions by department ~~o ~ ~ . ~ ~ ~~erenaent should
storea in their efforb to protect ~ ~~e all the more nceptive
small and medium aized ~�d~~ ~e ~~o~Bn c~pOratioas' invest-
establishments and to prevent ~ ~
~~�d me~ts in eales activitiea in
unemploym~t froal rl~ing. s ln~adverti~ir
eg
sn~ Japau.
When supermarkets made their ~
p ~y. ~ the field of domestic
aggreaaive debut, th~ Govern- diatribution policiea, the
ment also (ormulated lawe (in �0~ Governmmt first ot all should
1973) Go control theU runawag or lees oo a par with one � an- dismantle protective meaaures
ex ansion. Althou h the iQ for cottag~-level reiail outlets.
P g ordee tor fael~ eatrante to ~e argue that tbe Govern-
Government downgraded its s~~ Ja~~ ~r: ment should con'tinue its
_ controls on large-scale retail btve to conduct
establishmenta (such retaUera masdve~~sal
~es and a P'o~dve meaaurea in order to
are now required ody to file in ~i�g peet?ent tmeraploynient from
new establishment and expan- ~'~~6 ~d t� k�ep ~gi��al
sion tnstead of ~cekin~ Gavera- One aigniEicant counter- eommunities from being
ment permission fint), t6ey ~ailing ~ poiver to manu- ~ t~~. n~g}~.
have to seejc the Internatiooal facturere own sales chaneels y~~. Unemploymeat,
Trade ~ Induatry , Minieter's are maes sales companies now however, ahould and can be
arbitrntion lf thelr plana go ~ Tolryo s Akiha- handled by other policy
afoul of local small-scale ~t�r home dectric W~e there i� little
r~~~. $PP~~) ~ S~~ a~ at~fRdently convincing reasoa
(for cameras). foc protecting n~lghbothood
V~rNcal dfiliations ~~b ~~�A~ m~ stores at such ecotwmic casts.
- Vertical aftWations. of sales sales companies incres~ae in Tbere ia no guarantee, more~
channels by durable goods ~ number, theY w~l gi'~y over, that neighborhood ahops
manufacturers will appear aa ~�P~~ �0~~ f acc~s ~ '~11 forever kcep their present
formidable barriera to fordga ~~0~ ~�~g� ~r?anagema?t policy to be open
corporations wiahing to enter a�m~tu' and R01�0t� ~A till late at night.
the Japapese market. Ftilly Petitica s~nmonB aal~s firma.
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Such neighborhood stc+res will tive studles have so far been
have to bow out of tlte aceae made deapite the problem's
anyway if thore are further having been talked about so
changes in the Japaaese aociai heatedly~for ao long. Are there
structure and houeewlves start truly any tndustry-wlde
working in greoter numbera practices blocking innovations
and the staadard sizes of Ja~a- designed to streamline che
nese houaing uoits become far existing wholesaling systems?
blgger thau they are today. Some industries and in-
As to vertical afflliatio~t ot . dividual sorporations,
sal~s outlet~e~ by durable goob especially in tbe fteld of synthe-
manufactarera, atiffer applica- tic detergeots, repoct of greatly
tian of the Aati-Moaopoly Law streamlined distributinn
is mandatory ~ via-a-vis any syetems throt~h tbe use of
competition-restricting prac- elxtronic computer systems.
tices. Import carteh ahould also Such innovetioas, however, are
be reduced both in number and differeat stories from weliare
scale thraugh stiffer application impcovement of the economy.
of the same law. We mu~t iavestigate wh~her or
As to the complex and arcaae not they wlll increaae ca~npeti-
dlstribution systems, llttle poei� tioa (Eod o(8eriea)
- COPYRI(~iT: 1981 T~ 1~1IHON KEIZAI SHII~iIN, Iac.
CSO: 4120/247
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SCIENCE AND TECHNOLOGY �
ENERGY DEVELOPMEDTT, CONSERVATION PROJECTS REyIE~,IED
Alternative Energy Supplies
Tokyo ENERRU~I FORAMU in Japanese No 313, Vo1 27 Jan 81 pp 158-159
LText] (I) Petroleum-Substitute Energies and Their Supply Goals
The Types and the Target Supply Quantity of Various Petroleum-Substitute Energies
Which Need To Be Developed and Introduced (Refer to the table.)
Other Matters Related to the Supplies of Petroleum-Substitute Energies
1) This goal was set under the premise that an ever stronger cooperation between
� government and people will prevail as a result of the maximum understanding and
effort by the people and implementation of priority and deliberate policies by the
governmente We will make every effort to achieve this goal while paying praper
attention to the protection of ~he environment.
2) If necessary this goal may be revised in the future according to the changes in
the energy demand, the long-range prospect of petroleum supply, the state of affairs
of the development of petroleum-substitute energies, and other matters.
(II) The Outline of the Guideline for the Introduction of Alternative Energies
This guideline was drafted by taking into consideration the supply situation, the
technological standard, and other matters related to the petroleum-substitute
energies. It must be understood that the guideline remains flexible for each
individual enterprise according to the aCtual conditions o~ its energy usage.
Thp Types, the Characteristics, the Supply Situations, and the Standard of Utilization
Technology of the Petroleum-Substitute Energies That Must Be In~roduced.
The Guideline for the Introduction of Alternative Energi~s for the EnterprisPs
Which Are the Terminal Users
The tcerminal users of energy, especially those enterprises which consume a large
quantity of energy such as iron and steel industry, petrochemical industry, paper
and pulp manufacturing industry, cement industry, aluminum industry, and chemical
fiber industry, must make every effort to secure smooth and reliable petroleum-
substitute enera~ sources. Cooperation among the related enterprises and neighboring
enterprises is highly desfrable during the process of introducing the petroleum~sub-
stitute energies.
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(1) Coal
1) These enterprises which engage in the manufacture of iron using blast furnaces
must makP every effort to replace `.heir heavy oil burners with all-coke, pulvetiaed
coal, or coal oil mixture (COM) burners in order to introduce coal as the alternative
energy.
2) Pulverized coal may be used in the cement-baking furnace and the artificial,
lightweight aggregate-baking furnace while both pulverized and block coals may be
used in the coal-baking furnace and dolomite-baking furnace. Furthermore, coal
may be burned in existing furnaces by remodeling their burners. Enterprises
engaged in cement manufacturing must make plans to use coal over an extended period
of time. �
3) Except for a small number of boilers designed especially to burn oil for which
- transformation may be rather difficult, almost all other boilers for the generation
of steam and power generation can be converted to burn coal. Every enterprise
must make an effort to introduce coal as fuel for its boilers. A large-scale change-
over can be expected to take place especially in paper and pulp manufacturing
industry.
4) Coal can be introduced to the various furnaces of nonferrous metal refining
processes, including baking furnace, sintering furnace, smeltinq furnace, refininy
furnace, and heating furnace. Enterprises now having these furnaces or contemplating
new construction must make every effort to introduce coal as fuel.
5) Before introducing coal, make every effort to a) plan for l~ng-range coal utili-
zation, by taking into consideration the coal stor~ge problem incluciing utilization
of coal centers, securing sites for the disposal of coal ash, and making positive
utilization of coal ash; b) take appropriate environmental protection measures in
order to reduce or prevent dust, air and water pollution, and vibration problems
associated with the use of coal.
(2) Natural Gas
Introduction of city gas consisting mainly of natural gas through the city gas
supply system can be exp~cted. City gas has many useful applications such as fuel
_ for boilers, and fuel for various types of heating and heat-treatment processes.
Every enterprise must make an effort to introduce city gas as an alternative
energy. Introduction of city gas has many advantages, such as the fact that th;re
are very few restrictions on the application site and the relatively sma.il initial
investment cost. For these reasons, introduction of city gas is more attractive
to the medium- and small-scale enterprises and enterprises located in a densely
populated area.
- (3) Hydropower
_ It is desirable that hydroelectric power generation be increased through development
of undeveloped areas and redevelopment of existing facilities.
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In developing hydrepower, every effort must be made to: 1) fully utilize river
water, existing dams and waterways, a~d to plan for medium- and small-scale power
plants so that a centra~ management is possible; 2) promote harm~ny of operation
through adjustment and negoti~tion with other users of the river= an8 3) carry out
appropriate measures of environmental protection to prevent water pollution, and to
preserve the natural environment.
(4) Geotherm ~
The shallow geotherms having a temperature in excess of 200~C at the bottom of the
geothermal well can be used for thermal power qeneration. Those having a temperature
below 100�C may be used for the purpose of preheating high temperature water and
water for hot baths, air conditioning, and horticultnral applications. Every
enterprise must make an effort to utilize geotherms by carefully studying their
utilization potentials.
In utilizing geothermal energy, every effort must be made to 1) minimize the impact
of buildings and mechanical equipment on the natural scenery, and prevent pollution
of. water and soil by hydrogen sulfide and arsenic; 2) avdid conflict with other
rights and interests such as the hot spring rights, through adjustment and negotiation.
(5) Solar Energy
Solar energy can be utilized through use of the solar system in many areas of appli-
cation such as preheating high temperature water and watPr for hot bath and air
- conditioning; for drying purpose~ in the food processing industry, agriculture,
f~restry, and marine products industry; and in the fish culture industry. Every
enterprise must make an effort to utilize solar energy by carefully investigating
its utilization potentials.
(6) waste Matter and waste Heat
Every enterprise must make a positive effort to utilize the waste matter and waste
heat by understanding their energy characteristics. The waste liquid and wood
chips ~f paper and pulp manufacturing plants and the wood chips of sawmills and
plywcod manufacturing processes, in particular, must be utilized continuou3ly. At
the same time, effective measures must be taken to protect the environment from
air and water pollution, and foul odor.
The Guideline for the Introc3uction of Alternative Energy for the Enterprises Which
Are the Suppliers of Energy
Those enterprises which engage in the business of supplying electxicity, gas, and
heat, bear an important responsibility of supplying energy. Introductic,n by them
of petroleum-substitute energy promotes indirectly the introduction of pet.roleum-
sub~titute energy by those enterprises which are the terminal users of energy, and
thus contributes toward lowering Japan's dependency on petroleum.
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~ (1) Electric Power Enterprises
The electric power enterprises consume one-third of the total energy demand, so
that introduction of~petroleum-samstitute~enQrgy }ay the elactxir power entecprises
holds the key to the success or failure of Japan's effost to introduce petroleum-
substitute energies. ~
, Therefore, the electric power ent~rprises must make the greatest effort to introduce
= petroleum-substitute energy. They must: 1) make plans to diversify the electric
power sources b~~ first of all promoting the construction of nuclear power plants,
and the introduction of various forms of power generation including coal thermal,
LNG thermal, hydropower, and qeothermal; 2) not, as a rule, design any more new
power plants which burn oil, except for those already underway; 3) make an effort
to convert from oil to coal or LNG burning in existing plants, or to increase the
ratio af coal or LNG to oil in mixed burning furnaces; 4) engage in the development
of photovoltaic power generation, fuel cells, and other electric power sources as
past of their long-r~n5e plan.
In doing so, they must also: 1) make sure to maintain safety and carry out effective
measures to protect the environment; 2) promote the situation by improving the public
acceptance; 3) secure stable and diversified sources of fuels for the nuclear power
generation, coal thermal power generation, and LNG thermal power generation;
4) join the nation in an effort to promote the situation and to develop the tech-
nology, and to play an active role in the development and establishment of technology
by putting to good use each individual's store of technological knowhow.
(2) Gas Enterprises
The gas enterprises must further promote the introduction of petroleum-substitute
energies by: 1) aggressively promoting the introduction of imported natural gas,
while the local enterprises must also do the same; 2) making every effort to main-
tain utilization of coal and domestic natural gas; 3) develop technologies which
will promote the introduction of petroleum-substitute energies in the future.
In doing so, they must also: 1) properly maintain the receiving bases and the pipe-
_ line network, and promote the industrial LNG supply by making good use of the price
system; 2) make an effort to expand the utilization of. LNG which tends to slow
down durina the hot summe.r months by promoting the popularization of gas air-
conditioning equi.pment; 3) establish a system in which the users, including the
electric power enterprises, can accommodate one another; 4) proinote th~e development
of small gas air-conditioning equipment and the development and introduction of
fuel cells; 5) maintain the existing coke furnace facilities in order to maintain
coal utilization; 6) aggressively pursue, in close cooperation with the government,
the development of high calorie gasification technology and the complete gasification
technology in which cokes are not formed as part of their medium- to long-range
plan.
(3) Heat Supply Enterprises ~
The heat supply enterprises must make every effort to introc3uce waste heat as a
petroleum-substitute energy.
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i~i~iE=*1~~-O~~i~B (6~~t163~~) . I
~idl {?Z~� ~i4fCtP=~w -m{~gtf~ (~i*) 68 53~~ ,
i~*-~~l~f t~~l~ (~l~ 7ik1) ' ~ . . . 4t (1i~Gt fi?! )
~1, ~ K`c 12,300 35.Ii6 $GE~}~iBik~i3.16,350T~tT~i3� 5,681 50.996 ':.~w:
({(~~jo~}#ib^if(flt. ~~fJ3~*i~x3
~2) ~lfRo~g~to#kl~ch n. ~tffil~'R~c~i .
r~i ~ t, ~.sao ~.8~ s soo~x~w ~c~e~;i�~~~i i sio~ l~~z ia.a/
. . kw~rr~ 3e .
~e~t~rxo~t~l~szf~. N~~t~a~t~
~ sfi ~l .'c 7,130 20.4% ~'~~~~~4�~~"`#~!"~0~= 1',940 17.496
~3) ~,~~~.3~~~rX~r~~eszs~~o~~c
r o~~ff~t~r~ ~a, . ~
� ~kf1~UEi~~ltt3. ~dcf]33~R1_x3'~4l . ~
~ o~t~~~t~s~n. ~c~i~~~_~fia~ `
~C ~i s.i9o e.z96 tk~~sfitt. -At~ki~z,aoohkw. ~~h i~s~t i~.a36
, . 2,700T~kW~'~t5.~0075kW. ~M3~~$ .:i'~,::
~7$i31.230(~kWR~t`~i ~b o . .
� , i~RAv)f~16tJt~.o~3 ~5c_t3. tt~iN&~tl~ '
' t3~C~i~'4!: xbla't~f#iRik$~g ~ .I
~5) f~ R~t ~ao z.i~ xr~.Y~,n. ~tx~i~~~r_~fi3a~~t .ie o.z~c .
. ~t~iilt.9b075kW. ~OA3bR'#fJ~tt . t-._::,.'
245t~kW~'t`~i 3. � ' '
a~ i~ o~ ~o)idt~~i~tft4!=~~�*-t{3, ~cl~i .
~6~ i~ fC t? 3.8L0 11.1�~ RA. ~',tlti~1C~'1~4~fW 3. . 38 0.996 ,
s~tn.#-
_ 1r1~ 5ik6!!!f[ 100.09f~ . . , ~1~~~ 100.096
3 ~t 3.St~kl
The Supply Goals of Petroleum-Substitute Energies (1990)
Key: (A) Type of petroleum-substitute energy
(B) Target supply quantity of petroleum-substitute~energy (unit: 10,000 kl)
(C) Remark (D) Reference: 1978 (uait: 10,000 kl)
(lA) Coal
(1C) The supnly quantity of coal is 163.5 million tons
(2A) Nuclear power ~ ~
(2C) The supplv quantity of nuclear power is the supply quantity of the
- electricity generated from use of nuclear power. The output of nuclear
power generating facil,ities is in the .range of 51-53 million kW, and the
annual electricity output is 292 billion kWh.
(3A) Natural gas
(3C) The supply quantity of natural gas represents the sum total of imported
natural gas of 45 million tons and domestically produced natural gas of
7.6 million tons.
{4A) Hydropower
(4C) The supply qua~ztity of hydropower represents the supply quantity of
electricity generated by the�hyc3ropower generation. The output of hydro-
power facilities is 53 million kW cor~sisting of 2'.~ million kW from the
ordinary hydropower and 27 million kW from the elEVated water, and the
annual electricity output is 23 billion kWh.
(SA) Geotherm
(5C) The supply quantity of the geothermal energy includes the electricity
generated by the thermal power generation using geothermal energy. The
output of the related thermal power generation facilities is 3.5 million
kW and the annual electricity output is 24.5 billion kWh.�
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(6A) Other petroleum-substitute energies
(6C) Other petroleum-substitute energies include solar heat and the fuel
obtainable from liquefaction of coal.
(7A) Reference, Sum total
(7B) 350 million kl of equivalent petroleum
(7D) 112 million kl of equivalent petroleum.
Energy Budget
Tokyo MAINICHI SHIN~UN in Japanese 6 3an 81 p 9
- LR'ext7 Ninety Points Out of One Hundred for Full Mark
"Rating the most recent budget of the Ministry of International Trade and Industry,
a certain member of the Diet gave it 120 points, but I would say it deserves at least
9C points," appraised Yano, the permanent vice minister of the N,inistry of Inter-
national Trade and Industry, as soon as the government's original bill was dra~ted.
The energy budget which constitutes the major part of the budget of this ministry
increased a whopping 17.3 percent, well over the increase of the entire general
account of 9.9 percent. No wonder he held his head so high. "We must be satisf�ied~
with this budget which accomplished so much under the severe circumstances of
financial reconstruction. I am grateful for it," added Tanaka, the minister of
the international trade and industry, with a smile.
Let us relate in figures this in~lination toward the energy budget. The total
energy budget of the general account is 496.5 billion yen, amounting to an increase
of 73.4 billion yen (17.3 percent) over 1980. Excluding increases of 25.3 percent
for the national d~~bt, whose expenditures increases naturally by design and for the
payment of the past interest, and 18.7 percent for the local financial fu:~d, this
item has shown the largest growth of all general expenditure items. The energy
problem has been given maximum weight among all policy funds. The amount added to
the petroleum special account is 380 billion yen with an increase of 26.2 percent,
and the scale of the petroleum special account is 671.9 billion yen with an increase
of 20.7 percent.
The background which favors the energy budget is none other than today's severe
energy situation, especially the uncertainty of the petroleum supply. The T;_aqi-
Iranian conflict, which started last September and became, contrary to the general
expectation, a prolonged war, caused the daily supply of 5 million barrels of oil
to stop flowing. Although the petroleum exports from these two countries have been
partially restored, the volume remains very small. The world's daily oil supply is
said to be 1.5 million barrels (1 barrel - 159 liters) under the demand. With this
insufficiency of supply as the background, the OPEC nations raised the oil price
$4 per barrel at a meeting held last September at Bali island, Indonesia. "The
age of $40 oil will certainly be here early this year."
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Amidst an Uncertain Oil Supply
Tn short, we have received the double shxk of uncertainty.in the oil supply plus
heretofore-unheard-of high prices. It is expected tha~t some n~tional petroleum
companies wi11 have difficulties allocating oil starting this spring. It is
imperative for Japan, without losing a moment, to push forward various energy-saving
_ measures, and to develop and secure a number of petroleum-substitute energy
resources. These have resulted in the preparation of the recent "extravagrant" budget.
The fact that the Ministry of Finance was about to favor the budget in relation to
the energy matters could be seen clearly in the tax system reform which preceeded
the budget preparation. The investment tax exemption requested by the Ministry
of International Trade and Industry, in spite of strong objection from some quarters
.~s being a preferential enterprise tax system, was approved based on the fact that
it will be beneficial to the implementation of various energy-saving measures but
with one condition that the name be changed to "Energy Measures Promotional Tax
System" and its content shifted to favor the investments related to energy matters.
This tax system allows deductions of an amount equal to 7 pescent of the capital
invested in the equipment, or a special 30 percent depreciation. The.enterprises
are free to choose one of these two rules. This bill, different from the original
bill proposed by the Ministry of International Trade and Industry which involved
only the tax reduction, was brought up before the formal adoption in the LDP's tax
reForm bill and was passed in an instant.
Now then, what is it that is emphasized most strongly in this energy budget which
received such attention? It is the fund for the petroleum-substitute energy
measures. The government passed a bill outlining the "goals of petroleum-substitute
energies and their supply" during a cabinet meeting held on 28 November 1980.
Fifty percent of the total energy supply of 1990 is to be furnished by nonpetroleum
energy (it was 27 percent in 1978). This budget is to promote,according to this goal,
the utilization of nonpetroleum enerqy resources such as coal and nuclear power.
Especially large increases in the budget were found among the following items: fund
for the development of coal liquefaction technology increased to 23 billion yen
which is 2.3 times that in 1980; fund for the development of overseas coal increased
to 6.5 billion yen, amounting to an increase of 50 percent; fund for the development
of the technologies related to nuclear power increased to 7.8 billion yen, amounting
to an increase of 70 percent; fund for the development and stockpiling of petroleum,
including some brand-new undertakings such as oil shale extraction has also
increased 23 percent.
Some of the problems associated with this budget include payments to the peripheral
areas of the nuclear power generating facilities and to the prefecture exporting
electricity. The former represents the payment to t~he inhabitants and the enter-
prises of the cities, towns, and villages at the site of nuclear plants and neighboring
areas. This payment is an extremely unpr~cedented case of distributing tax
money directly to people. Although the governors of the uxban and rural prefectures
feel that direct payment to the people ought to be abolished anc3 the payment be
used for the local development projects, direct payment to the people is likely to
continue because this practice originated, in the first place, in demands for a
disco~ant in the electricity bill.
_ On the other hand, the latter payment is made to those prefectures whose electricity
generation exceeds more than 50 percent of its own consumption. That both payments
ought to be the responsibility of the power company itself remains the strongly held
public opinion, so it appears that there is a need to minimize the said payments.
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Surveillance for Extravagance
In any case, the energy budget was passed with the mood that "as long as it is for
energy measures, it is unavoidable," so that the possibility of extravagance is even
higher. It is conceivable that domestic private enterprises may refuse to use the
coals developed overseas accordinq to this national plan. Therefore, in implementing
- various items of the energy budget, we must also take other, fine-grained, related
measures and, at th~ same time, people must keep a keen eye on these activities in
order to prevent any form of wastefulness to occur.
COPYRIGHT: Mainichi Shimbunsha 1981
Oil Shale Exploitation
Tokyo NIHON KEIZAI SHII~IDUN in Japanese S Jan 81 p 7
LText7 The Petroleum Public Corporation (president: Aisaji Tokunaga) has assigned
this year as the "first year of oil shale," and made plans to begin development of
oil shale in Japan. This activity has never before been taken up seriously in
Japan. How?ver, ~ince a fund for the research and development of oil shale
appeared for the first time in the 1981 budget, development of dry distillation
technology has already started, and an inspection party has been dispatched to
Australia in order to materialize the overseas oil shale development project. All
the necessary technologies for extracting oil from oil shale will be established
during the next 5 years. The oil shales of Augstralia, China, and Brazil will then
be exploited, and approximately 44 million barrels of shale oil in 1990 and approxi-
mately 107 million barrels in 1995 will be imported.
Experimental Plant by 1983-84
According to the plan made by the Petroleum Public Corporation, approximately 13
billion yen will be invested over a pzriod of 5 years from 1981 to 1985 in the
development of a uniquely Japanese technology to build and operate an exnerimental
plant. A pilot plant with a capacity of 300-500 tons a day is to be constructed
inside Japan during the year 1983-84. With a budget of 1.2 billion yen for 1981
for research and development, various technologies necessary for the extraction of
oil, including mining, grinding, and dry distillation, will be developed by private
enterprises, which specialize in machinery, plant, and petroleum refining,
entrusted with this responsibility. An environmental protection investigation,
including the waste shale treatment method, will also be a part of the activities.
The subject areas to be explored include, tentatively, those areas having large
potential reserves such as Australia, China, and Brazil, which is said to contain
one-fourth of the world's known exploitable reserves today.
These countries have been sounded out on their interest in cooperating. From
Australia, the Petroleum Public Corporation has received an invitation from the
Southern Pacific Petroleum Company for a joint oil shale development in the Condor
District on the east coast of Queensland. The Condor District is a hopeful area
with approximately 6 billion barrels of primeval reserves. The mine bed thickness
is said to range from 300 to 400 meters~ buried under 30-350 meters of topsoil.
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Investi.gation and a feasibility study are being carried out today. A daily pro-
duction of 500,000 barrels is the final goal. The Petroleum Public Corporation is
to send an inspection team to Australia in order to investigate the possibility of
importing shale oil in case Japan participates in the joint venture.
When President Tokunaga visited China last October, he made an offer to investigate
China's oil shale reserve situation. Japan's praposed plan will be presented to the
Chinese Government in January. China is producing shale oil on a small-scale today
at Fushun, Donqbei, aMd also at Maoming in southern Guangdong, but the Process is
outdated a~d also costly. The annual production at Maoming is 700,000 barrels today,
and its confirmec3 reserve is said to be approximately 1.5 billion barrels. China
is making plans to expand its production to 3 million barrels a year. In addition
to reconstruction of Maoming, the Petroleum Public Corporation considers that there
is room for Japan's coogQration in the brand-new development projects in the
Shandong and Shanxi areas.
In Brazil, its nati~nally-owned petroleum company, Petrobras, has a plan to build
a commercial plant with a capacity of 500,00~ barrels a day, and they are at the
stage of running an experimental plant havin~3 a capacity of 1,000 barrels a day.
- President Tokunaga has received an invitatio~~ from President Ueki of Petrobras to
participate in a joint venture after inspecti,^; the site, and the Petroleum Public
Corporation has a positive plan to participate in this venture.
Oil shale, like tar sand, is considered to have a reserve comparable in size with
petroleum itself. However, it is quite difficult to extract oil from shale at low
cost by means of dry distillation, so that no countries of the world have ever
succeeded in large-scale commercialization of this operation so far. Japan has
participated in the development of Canada's tar sand, but oil shale is a totally
undeveloped area in Japan. While tar sands are concentrated in Canada and ~
Venezuela, oil shales are widely distributed over the earth. There�ore, a
successful development of a low-cost process will contribute greatly to Japan's
supply of petroleum-substitute energy; the Petroleum Public Corporation thinks so.
COPYRIGHT: Nihon Keizai Shimbunsah 1981
Technical Cooperation
Tokyo NIHON KEIZAI SHIMBUN in Japanese 9 Jan S1 p 1
Lfiext7 The Ministry of International Trade and Industry has broken the shell of a
policy, "refining at the location of consumption," and changed the petroleum policies
to liberalize the import of oil products from the oil-producing countries and to
offer technical cooperation to the oil-producing countries in the areas of oil
refining and the sal.e of oil products. This is a partial opening of Japan's
policies, which heretofore have been closed to the oil-producing countries,
responding to their changeover from exporting crude oil to exporting oil products,
with much higher added value, presently being attempted by the oil-producing countries.
However, under the present situation, there is a danger that the oil-producing
. nations may keep the three intermediate products, which have a greater demand, for
their own domestic consumption and export only the heavy oil. Therefore, the Ministry
of International Trade and Industry is planning to use the heavy oil cracking
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technology (an advanced technology of obtairiing three intermediate products from
heavy oil) as the mainstay for cooperation with the oil-producing countries in order
to promote an export posture of the oil products which satisfies the demand
structure of the consuming nations such as Japan.
The petroleum policy of the Ministry of International Trade and Industry used to up-
hold the doctrine, "refining at the site of conaumption," so that as a rule only
crude oil was imported and the refining was done in Japan, therefore the technical
cooperation offered by the petroleum department to the oil-producing countries was
limited to exploration and development of crude oil. Because, if refining oil is
entrusted widely to the other nations, a supply syst~m which satisfies the domestic
oil products demanc3 structure cannot be met and an insufficient supply of a certain
type of oil product cannot be avoided. The reason for changing the policy at this
time is because the Minis~ry of International Trade and Industry has been convinced
that the movement and the desire of the oil-producing countries to launch the export
of oil products can no longer be halted.
The oil-producing nations centered around OPEC have, since 1979, started to make
plans one nation after another for the construction of oil refineries to produce
oil products for export. Export of oil products, as compared with the present
policy of export of crude oil only, has many merits as far as the oil-producing
nations are concerned, such as a much higher added value, domestic industrialization,
and the creation of jobs. By doing so, the oil-producing nations aim to control
the entire petroleum circulation system from crude oil to refining and to the sale
of various oil products. After the Iranian-Iraqi war, when their oil refining
facilities are reconstructed, this trend is expected to accelerate significantly.
~ The oil-producing nations will reduce their crude oil export by the same amount they
increase their export of oil products. When this happens, the supply and demand of
crude oil will become very tight. And what is even more troublesome is the possi-
bility that the oil products expor.ted by these nations may be weighted in favor of
heavy oil, because the demand for heavy oil is small in the oil-producing nations
where industrialization is lagging. On the other hand, modernization of national
life is quite advanced, so that the demands for the three intermediate oil products
such as kexosene for heating and light oil have increased significantly. Therefore,
there is a danger of not having a sufficient supply of the three intermediate product~
to be imported by the consumer nations.
To prevent it from happening, the Ministry of International Trade and Industry con-
siders that "we cannot do otherwise but to cooperate with the oil-producing nations
and aid them in expanding their oil refining and export posture to match the world's
demand structure." Therefore, the ministry will begin to offer technological
education to engineers of the oil-producing nations concerning refining and sale:~
at the "Oilman Center" which will be built next year. Each year, approximately 60
engineers and government representatives in charge of petroleum affairs will be
invited over to Japan while approximately 30 Japanese engineers will be dispatched
to the oil-producing nations to train their workers on site.
The center of training and technical cooperation will be the heavy oil cracking
technology. In order to prevent the shortage of three intermediate products such
as kerosene, technological research witli governmental assistance was initiated in
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1979 and, if everything progresses smoothly, the new technology is expected to be '
in a usable state by 1983. The Mini$try of International Trade and Industry will
try to popularize this advanced tectinolmgy among the oil-producing nations. When
- new oil re.fineries are to be built by the vil-producing nations, Japan will be ready
~ to offer caoperation by building this cracking facility for the oil producing nation.
When such technological cooperation materializes, import of variou~ s~il products
currently restricted by the import quota system shall be relaxed. The Ministry of
International Trade and Industry believes that the medium- to long-r~nge stability
of crude oil and oil products supplies can be strengthened by str~ngthening the mutual
dependency relationship between the mil-producing nations and the oil-consuming
nations.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
Biomass Energy Projects
Tokyo NIKKAN KOGYU SHIN~UN in Japanese 10 Jan 81 p 1
~Text] Japan's economic and technological cooperation with the developing nations
for the development of biomass en2rgy is mov~.:ng toward materialization. The Overseas
- Economic Cooperation Fund (president: Kaneo Ishihara) and the Internat.ional
Cooperati~e Business Group (president: Keisuka Arita) have.3approved a loan of 150
million yen as the No 1 financing policy to the International Manjoca Development
Company (president: Kenji Nakanishi), whi~h is to car~ry out a joint venture with a
local enterprise to manufacture alcohol from manjoca (a kind of potato) in Br~zil.
The Japanese Government is to launch a feasibility study of the Philippines' biomass
energy development project also.
A Loan of 150 Million Yen Approved by the Overseas Economic Cooperation Fund and the
International Cooperative Business Group
As soon as a loan of 150 m:llion yen by the Overseas Economic Cooperation Fund
and the International Cooperative Business Group (JICA) is carried out, the Inter-
nat~onal Manjoca Development Company will begin to carry out experiment on manu-
fa.cture of alcohol from the Brazilisn manjoca (a kind of potato), and the project
is scheduled to last 1 and 1/2 years. As a measure to counter the soaring petroleum
prices, the Southeast Asian nations such as Phi3.ippines, Thailand, anc] Indonesia in
addition to Brazil, have begun to look to the development of aicohol as a petroleum-
substitute energy source. While Japan's financial aid or plant and allowance in
kind to these developing nations has begun to materialize, the recent fund loan
- was the first of its kind.
Manjoca is a kind of potato, and alcohol can be produced from it by means of a
series of processes including grinding, hydropressing, steam-cooking, and fermenting.
The International Manjoca Development Company, which represents the opening on the
Japanese side, was organized in June 1979, from a joint investment of 22 related
Japanese enterprises, with an authorized capital of 500 million yen and a paid-up
capital of 220 million yen.

~
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After the fund financing is approved;, this company will work side-by-side with a
1oca1 Braziiian enterprise, the Copamasa (organized in August 1979; headquarters at
Belem in i~ara Province) to make preparation for the development of manjoca alcohol.
''i~he local enterprise has already experimentally cultivat~d a total of 117 varieties
of -~njoca in the Tomeas District of Para Province, and chosen 22 high-yield
varieties. These varieties can yield 40 tons per hectare a year compared with an
ordinary manjoca variety which yields only 10 tons per hectare.
This cot~tpany and the local enterprise wi11 soon begin the first phase of ~he
_ experimental alcohol production using the high-yield manjoca. The content of the
activities include the feasibility study of mass cultivation, the study of alcohol
production technology, and evaluation of the p~troleum saving effect. After this
plant begins to operate, Brazil will be able to produce 550 kl of alcohol a year.
Iyt order to reduce the amount o� petroleum import, Brazil drafted a national
alcohol plan in 1975, and the plan is being implemented today. As one of the links
of this plan, production of alcohol from sugarcane yielded 579,000 kl in 1975 and
3.9 million kl in 1980. The alcohol yield is targeted for 10.7 million kl by 1985,
and manjoca will be utilized in addition to the sugarcane.
Feasibility Study To Be Carried Out in Philippines Too
The Japanese Government has been requested by the Philippines ~overnment to carry
out a feasibility study of Philippines' biomass energy development plan, and the
study will begin next month. The results of the study will be summed up and pre-
sented to the Philippines Government. According to the Ministry of Foreign Affairs,
the governments of Indonesia and Tharland have also sounded the Japanese Government
about a feasibility study af their biomass ener~y development plans. If the
Philippine biomass energy development plan can be realized, then "requests to carry
out a feasibility study" from the me~nber nations of the Southeast Asian Alliance
besides the Philippines are expected to pour in.
The Philippine Government which has to manage 85 percent of its energy consumption
each year with imported ail, last year launched a 5-year "national alcogas plan,"
with this aim to get riid of the "ril-dependent e~onomy"by producing ethanol, which
- will be mixed with gasoline and used as the automcbile fuel, from biomass raw
material such as sugarcane and cassava. The biomass energy development project
belongs to one of the links of this master plan.
Specifically, this plan includes construction of factories (farms) for the pro-
duction of the raw materials for biomass e~ergy such as sugarcane and cassava, and
the construction of 2~ medium-size ~thanol manufacturing plants with a capacity of
50-60 kl per day scattered all over the country. During the recent visit to the
Philippines, Prime Minister Suzuki received a request from the President Marcos for
cooperation with the Philippines' national alcohol project.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981
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Oil Exploratory Drilling Projects
Tokyo NIKKAN KOGYO SHINIDUN in Japanese 10 Jan 81 p 4
~ ~ext7 The Resources and Energy Office of the Ministry of international Trade and
Industry disclosed on the 9th in the 1981 "Basic Investigation of Domestic Petro-
leum and Natural Gas: in what relation the government intends to promote the develop-
ment of domestic petroleum and natural gas. It revealed the specific 20 year
projects as part ot the "fifth 5-year development pla~ns for the domestic petroleum
and combustible na~urai gas resources. According to this, a basic exploratory
drilling will be carried out at Kuromachiuchi-cho, Doto Peninsula. Hokkaido. This
is the first exploratory drilling carried out on land in 7 years. On the other hand,
the basic exploratory drilling project carried out at sea since 1980 will be carried
out this year along the coast of the Sea of Japan in Tohoku District. Drilling will
, be carried out to the depth of 4,500 meters in order to investigate the geological
structure of the area. Moreover, the 1981 budget for. the domestic petroleum and
natural gas basic exploration is 5,796,000,000 yen; an increase of 57 percent com-
pared with *he previous year.
The Coast of the Sea of Japan in Tohoku District Chosen as Ocean Exploration Site
According to the basic investigation pr~ject, the exploratory drilling on land will
be carried out at Kuromachiuchi-cho on Doto Peninsula. Kuromachiuchi is situated
on a line connecting the area on the coast ~f the Sea of Japan in Tohoku where
petroleum and natural gas have either been discovered or been in production and an
- area around Saharin Island in Russia (exploratory activities are being carried out
today). Therefore, the possibility of having petrcleum and natural gas reserves
there is considered quite high. (Although small in quantity, natural gas is
actually being produced at Chomanbu which is adjacent to Kuromachiuchi.)
7Che depth of drilling will be 3,300 meters, and the budget for this project is 693
million yen. The operations.associated with the exploratory drilling wi~ll be
carried out by the Petroleum Resources Development Co which is the holder of the
mining rights. �
Exploratory drilling on land had taken place until 1975. It has been discontinued
since then, so that this drilling will be the first in 7 years.
The basic exploratory drilling in the ocean will be carried out along the coast
of the Sea of Japan in Tohoku District. The specific location has not been revealed
on account of the fishing adjustment. The drilling depth will be 4,500 meters
(ocean depth: 230 meters) and the possibility of reserve being discovered in the
green rough will be investigated. The operations associated with the exploratory
drilling will be carried out by the owner of the mining rights in that area. The
basic exploratory drilling in the ocean is an extension of the drilling activity
(which is still going on) offshore near Miyako-jitaa in Okinawa.
In addition, according to the plan, the basic physical investigation will be
carried out in the ocean along "the coast of the Sea of Japan in the southwest
- area," a linear length of approximately 3,000 km from south of Sado in Niigata Pre-
fecture of the Sanin area. The budget for this project is 488 million yen. In
addition to drilling a~ Doto Peninsula in Hokkaido which started last year, exploratory
drilling at the Tokatsu area in Hokkaido will be emphasized this year, and a physical
investigation of the area will be carried out. Including Doto Peninsula, the total
linear length of the work will be 130 km ~ith a budget of 394 million yen.
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Furthermore, the 1981 basic magnetic investigation includes a budget of 57 million
_ yen to carry out an investigation in preparation for a basic exploratory drilling
of two wells in the ocean to be carried out next year.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981
Underground Oil Storage Plan
Tokyo MAINICHI SHII~UN in Japanese 10 Jan 81 p 1
~ext7 The Resources and Energy Office of the MITI and the Petroleum Public Cor-
poration are jointly carrying out the r~search and development of an underground
storage base as a safe way of storing oil, and four locations have surfaced as pos-
sible sites for the construction of practical storage tanks. A feasibility study
will be carried out by the Reso~rces and Energy Office and the Petroleum Public Cor-
poration in 1981 at such places as Kuji-shi in Iwate Prefecture, the homestate of
the Prime Minister Suzuki, and construction will begin in 1982 after the experimental
results obtained from the demonstration plant, which is being constructed at Kikuma-
cho in Ehime Prefecture, are processed. Both sites are expected to become state-
controlled storage sites eventually.
I'easibility Study To Begin this Fall, Carried Out by the Energy Office and the Petro-
leum Corporation
There are four possible sites for construction of underground storage according to
the Resources and Energy Office and the Petroleum Public Corporation. These are
Kuji-shi in Iwate Prefecture, Kushikino-shi and Yakujima in Kagoshima Prefecture,
and Kikuma-cho where the demonstration plant is being constructed. From a total
of 67 selected spots all over the country considered to be suitable for the con-
struction of large-scale underground storage, the number was eventually narrowed
down to 4, after the detailed investigations were carriecl out, including investi-
gation of earthquake resistance, the geological properties, and the bedrock and
also listening to local opinion. Although the exact scope is not yet decided, the
storage capacity is expected to be in the range of 2-5 million kl. The feasibility
study is expected to begin this fall with a budget of 100 million yen. ~
The concept of underground oil storage was developed first in Scandinavia, especially
in Norway and Sweden. A huge hole is bored in the bedrock and the hole is used as
an old storage tank. The oil is prevented from leaking by the hydraulic pressure of
the underground water. The safety of the underground storage is said to be very
~ good. It can withstand earthquakes quite well, because it is surrounded by hydraulic
pressure. Furthermore, it requires very little land area, therefore it is
- generally considered to be more effective than the aboveground tank storage or
- storage in the ocean.
Research in this field was started in Japan in 1976, and the Petroleum Public
Corporation started construction of a demonstration plant with a 25,000 kl capacity
at Kikuma-cho in 1979. The work is still continuing and it is expected to be
finished this fall. An experiment will be carried out by storing oil for a period
of. 1 year. As soon as the experiment is finished, construction of a practical
underground storage tank will be undertaken. It is estimated that 20-30 percent of
the 30 million kl of national oi1 stockpiled in the future wi11 be stored under-
ground.
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More than 30 years experience in underground oil storage has been accumulated in
the Scandinavia. Today, underground oil storage is becoming popular over all of
~urope and even in th~ United States. In France, an underground storage tank of
more than 5 million kl capacity has been constructed.
Since this construction technology was first introcluced to Japan from the Scanska
Co of Sweden by the Kiyomizu Constructi~n Co in August of 1976, there have been
approximately 20 firms engaged in the introduction of this technology in preparation
for the construction of practical storage tanks.
The demonstration plant being built at Kikuma-cho utilizes a xocky mountain by the
. shore of the Seto Inland Sea. It consists of a tank, 15 m wide, 20 m deep and 110
m long, situated at a depth of 40 m below sea level. The tank is located below sea
, level in order to apply hydraulic presgure. The excavation of a service tunnel has
been finished and excavation of the tank itself is under w~ay.
' (1 j~~.'~~~~~~~ % ~ ~~'~',,,y~"~~'~~~~+.:
� , ~ ' ;'i a ~ . i,~ ~ ~ . '~t- ~
~,y'ibw.
+ ~i n ~1 ~ % S -
~ . ti ' i� ~ r. ,
, . . ~ 1: i,:'
~ ~ .r Yj',~..
. - , ~ ~ 1 ~'y�
~5 ~r ~ .
1V ~ ' .~�y.~~4~
' ~ ~ ' ~ e~
2 ~-e~~%~ti ~
_ ~ .
3 ~~-u
~
~ . (5):r.;~~
, 3kt~jhi~n
~ , l .s'
' . . ~ 1t,-. .-4~ . .
Key: 1. Schematic diagram of demonstration plant at Kikuma-cho
2. Service tunnel 6. Water seal tunnel
3. Vertical shaft 7. Oil storage tank
- 4. Water seal boring 8. Water bed
5. Pump room 9. Crude oil
COPYRIGHT: Mainichi Shimbunsha 1981
Oil Conservation Target
T~kyo NIHON KEIZAI SHIMBUN in Japanese 14 Jan 81 p 3
~R'ext7 The Japanese Government determined on the 13th that the 1981 Oil Conservation
Target will be 25 million kl. In view of a probable shortage in oil supply in the
latter half of this year as the Iranian-Iraqi war drags on and the need to strengthen
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the eneryy saving p~s~ure, the government decided to increase the oil conservation
target by 5 million kl over the 1980 target (7 percentr 20 million kl). Conservation
- efforts by the production dep~rtment of various industries are especially mandated.
The conservation target for the general iMdustry excluding the electric power
industry has been increased to 6 million kl which is twice last year's target. On
the other hand, conservation of energy related to national life such as the adjustment
_ of thermo~r~eter settings for heating and cooling and se1F-discipline by those who
own private cars, is considered to have reached its limit so that the target this
year is 14 mi,llion kl, up only 1 million kl from last year. This national goal is
expected to be approved by the cabinet meeting which will convene on 23d to discuss
the consoiidated energy measure promotion problem.
. The oil conservation target is a measure of the difference between oil consumption
with and without conservatian efforts. When it is expressed in "percentage," it is
often confused with the rate of cutback from the previous year's consumption. The
government has not decided whether or not to use this expression of conservation
rate this year. However~ according to a source at the MITI, the conservation target
of 25 million kl amounts to a"8 percent conservation rate."
The domestic oil situation t~day is rather relaxed thanks to the strengthening of
stockpiles and the reduction in demand as a result of conservation efforts. Never-
theless, the government has set a target exceeding that of 1980 in order to further
strengthen the conservation effort. The reasons why such action is taken include
_ the following: 1) The trend of the world's oil supply and demand in the latter half
of 1981 is unclear. 2) The IEA (International Energy Agency) ha~ reduced its
estimated total oil import by member nations during the fir5t quarter of 1981 from
the original 254 million tons to 238 million tons, and has clemanded that each member
nation practice conservation. 3) There is an urgent need to establish a genuine oil
conservation system by promoting introduction of various energy-saving equipment by
industries.
The detail of the conservation target is as follows: 1) The saving of 14 million
kl (13 million for 1980) to be achieved by the general conservation measures carried
out in homes and the business departments of industries by properly setting the
thermostat temperature for heating and cooling: 2) The saving of 5 million kl (4
million for 1980) to be achieved by the ~lect.ric power industry by switching from
oil to an alteraative fuel; 3) The saving of 6 million kl (3 million for 1980) to
be achieved by the production departments of industries by rationalizing their
energy usage and switching to an alternative fuel.
Oil conservation to be achieve~l by the production departments of industries is
expected to be achieved mainly through the introduction of energy-saving equipment.
For 3 years starting in 1981, a consolidated energy investment promotional tax law
will be implemented by the government. This tax law allows a reductior. in tax
equivalent to 7 percent of the total investment related to energy--saving and
alternative energy equipment (or a special 30 percent lst year depreciation for
the equipment). The government is counting on the effect of this investment tax
reduc~ion system on industries, expecting that a significant investment will be
made in energy-saving equipment so that oil consumption by the production department
of various industries can be reduced significantly. Whi.le the oil conservation
measures taken by industries in the past used to be centered around incidental
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n~casures such as recovery and reuse of waste energy, this new effort will be centered
around positive measures such as conservation achieved by the production facilities
themselves, for exampler from an introduction of energy-saving industrial furnaces.
_ Popularization of gas cooling systems and solar systems is an additional new
measure for general energy conservation. A thermostate setting of 28�C for air-
conditioning and a 20 percent reduction in the use of elevators remain in force as
b~fore. It is considered that the conservation measures applicable to the national
- life in general have reached a limit and not mu~h more can be done in this area.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
LPG Stockpile Plan
Tokya NIKKAN KOGYO SHINIDUN in Japanese 14 Jan 81 p 3
~ex) Petroleum Stockpile Reform Bill To Be Introduced
The Resource and Energy Office of MITI is preparing to introduce in early February
a Petroleum Stockpile Reform Bill to the Diet mandating the stockpiling o~ liquefied
petroleum gas (LPG) by the LPG importers starting in early 1981. The amount to be
stockpiled is 2 and 1/2 days' supply. The mandatory stockpile will be increased to
15 days' supply by 1 April, 1982, accozding to the Resource and Energy Office. When
this LPG stockpile law is put into effect, Japan's petroleum and oil product stock-
pile system will be roughly complete and a foundation for steady oil supply will
have been laid.
Star.ting Out With Two and a Half Days' Supply in 1981
There are two kinds of LPG: that which is produced by the domestic oil refineries
and that which is produced by an effective utilization of the oilfield gas by the
_ oil-producing countries. The latter is imported LPG transported to Japan in special
- tankers. Domestic LPG demand used to be satisfied by LPG produced domestically.
As the demand for LPG increased, more and more LPG was imported, and at present,
the imported LPG surpasses the domestic LPG.
The Middle East is the center of the source of imported LPG and Saudi Arabia supplies
the largest share. According to the official "long-range perspective of energy supply
and demand," the volume of imported LPG is expected to be 20 million tons in 1985,
26 million tons in 1990, and 33 million tons in 1995. LPG is valued as a"clean
gaseous fuel."
The domestic demand on LPG is widespread. In addition to the 18 million households--
approximately 60 percent of the families of more than 2 persons nationwide--which
use LPG as family fuel, the demand is expanding in such areas as raw material for
cwty gas, and fuel for taxis and industries. Its importance as a part of the total
energy requirement is increasing rapidly. Therefore, in addition to a movement to
~ diversify the LPG supply sourcer an opinion concerning mandatory LPG stockpiling as
a means of stabilizing its supply has grown stronger in recen~ years, and the question
of stockpiling was deliberated in the Petroleum Council as early as late 1979.
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According to the plan, a stockpile target of 50 days' supply will be achieved by
1989. The 1981 governmental budget includes funds for assisting in the purchase of
stockpiled LPG, the construction of a stockpile base, and cooperative st~ckpile
(among the LPG importers). The Resources and Energy Office will in early February
introduce the Present Petroleum Stockpile Re�orm Bill to the Diet. The law will be
implemented 4 months after its passage, or 3 months after, if its passage is delayed.
With a stockpile of 2 and 1/2 days' supply each in the first half and the second
half of 1981, or a total of 5 days' supply plus a stockpile of 10 days' supply in
the private sector, the total stockpile will be 15 days' supply by 1 April, 1982.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981
Feasibility Study on Sites
~
Tokyo NIKKAN KOGYO SHIN~UN in Japanese 15 Jan 81 p 1
LText7 The Resources and Energy Office of MITI and the Petroleum Public Corporation
will determine the five prospective sites for the national petroleum stockpile which
will be the objects of the third feasibility study. Together with the first and the
second feasibility-study sites and the underground stockpile sites, preparation for
the establishment of a 30 million kl (actual capacity of 40 million kl) system will
be completed by the end of 1988. On the other hand, in addition to these land
stockpile bases, the tanker storage of 7.2 million kl will be expanded to 10 million
kl in 1982 and a decision on the selection of new tanker stockpile bases wi11 be
made this summer.
Oil stockpiling as a measure of guaranteeing energy security is being emphasized by
every nation of the world. In Japan, since 1978 the strengthening_of the national
stockpile has been undertaken cooperatively with the realization of ~ 90-day stockpile
by the private sector and a stockpile of 7.2 million kl by the Petroleum Public
Corporation in the form of tanker stockpiles. However, for long- anc7 medium-range
stockpiles, construction of permanent land stockpile bases is necessary. Therefore,
the Resources and Energy Office and the Petroleum Public Corporation have jointly
selected prospective sites and carried out feasibility studies as follows: The
fir.st feasibility study was carr.ied out at the following four sites: Mutsuogawahara,
Jogojima in Nagasaki Prefecture, Rinko in Fukui Prefecture, and Shirojima in Fukuoka
Prefecture. The second feasibility study was carried out last fall at the following
four sites: eastern Urakoboku, Kanezawako, Umagejima and Yakujima in Kagoshima
Prefecture. Furthermore, the following sites have been chosen for feasibility
studies as possible underground stockpile sites: Kuji in Iwate Prefecture, Kikuma
in Ehime Prefecture, Kushikino and Yakujima in Kagoshim~ Prefecture.
However, not every site studied can become an actual site for the construction of
a stockpile base. There is so far only one site--Mutsuogawahara area--where actual
construction work is under way. A po~tion of the work will be ~completed in 1982.
Kanezawako and Yakujima have been abandoned completely, while Umagejima, Jogojim~.~
and Fukui Rinko are still pending. Shirojima and eastern Urakoboku have been chosen
as construction sites and construction work will begin within this year, undertaken
by the Stockpile Company.
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As a result, the stockpile bases expected to be completed by the end of 1988 will
have a total capacity of 23 million kl. In order to be able to establish as planned,
_ ~a 30 million kl stockpile sy$tem by:~,h~ same time, a total capacity of 40 million kl
with a 30 percent reserve capacity will be necessary. Therefo~e, it will be
ner_essary to construct stockpile bases having an additional 17 million kl capacity.
In view of this, the Resources and Energy Office and the Petroleum Public Cor-
poration will by the end of this month select five new prospective sites for the
third feasibility study. Ten areas including Shibushiwan in Kagoshima Prefecture,
Akita Prefecture, and Ikijima in Nagasaki Prefecture have been named as the candidate
sites. However, at the Petroleum Public Corporation, a hearing is being conducted
by the "National Stockpile Base Pl~nning Committee" (chaired by Toshie Okumura,
honorary professor at Tokyo University). They are accelerating the selection of the
five sites based on the geographical conditions and the economic~l considerations.
` When this is finished, various measures for the establishment of the~30 million kl
national oil stockpile plan will be finished for the time being. As soon as these
permanent land stockpile bases are ~completed, the handling of the oil becomes most
important. The Resources and Energy Office and the Petroleum Public Corporation
are planning to transfer the 7.2 million kl of oil currently stockpiled in a total
of 26 tankers in Tachibana Bay in Nagasaki Prefecture and offshore of Iwo Jima to
the land bases. In the meantime., before 1982, when the Mutsuogawahara base is expected
to be completed, at least l0 million kl of tanker storage capacity is considered
to be necessary therefore, more tankers must be added to the existing fleet, and
c~egotiations are under way to s~cure a mooring site for these new tankers. Oita
Prefecture is among the prospective mooring~sites.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981 '
Oil Import Goals .
Tokyo NIHON KEIZAI SHII~UN in Japanese 20 Jan 81 p 3
LTex) The head of the Resources and Energy Office of MITI revealed on the 19th
that the 1981 oil import (crude oil and oil products) as part of the 1981 petroleum
supply plan which will be drafted this spring "will probably be significantly
smaller than the planned volume for this year (5.4 million barrels a day)," and the
figure will be in the ~rder of 5.2-5.3 million barrels a day. In view of the fact
that the actual 1980 0;.1 import fell short of 5.05 million barrels, the government
is going to "make an exiergy-saving plan in accordance with the actual condition."
The same official also indicated that the plan for 1985 oil imparts that will also
be discussed at the samQ time will be on the smaller side than Japan's 1985 Oil
Import Control Target (6.3 million barrels a day) determined by an international
agreement.
As a result of this policy, established by the Resources and Energy Office, the
Japanese Government will be able to cope with a cutback on Japan's oil import control
target which will be discussed at the IEA (International Energy Agency) Ministerial
Conference to be held i?~ May. Furthermore, the tentative perspec~ives of long-
range energy supply and demand which were based on a figure of G.3 million barrels
a day for the 1985 oil import (drawn up in August of 1979) and the petroleum sub-
stitute energy sup~ly g~~als, e.g., Japan's main energy policies, are expected to be
completely revised wi.;:hin a year.
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The oil supply plan which constitutes a guide for Japan's oil pclicy is revised
each year to cover the next 5 years (1981 plan covers a period ending in 1985).
The plan deals specifically with the amount o� oil to be imported, the amount of
crude oil to be refined, and the amount of oil products to be sold. According to
the 1980 plan, the volume of oil import was to be approximately 5.4 million barrels
a day (316 ~_llion kl a year; 1 barrel = 0.159 kl) for 1980, approximately 5.6
ma.llion barrels a day (approximately 330 million kl a year) for 1981, and 6.2
million barrels a day (approximately 360 million kl a year) for 1984.
Japan's oil import goals (5.4 million barrels a day for 1980 and 6.3 million
barrels a day for 1985) determined at the Tokyo Summit (a conference of the heads
of states of the advanced nations) held in 1979 were followed and the import volume
_ was increased 3-4 percent each year from 1980 to 1985. However, as a result of
the development in the energy-saving efforts, the actual oil import last year was
approximately 8 percent below the planned figure. At the same time, the movement
to further cutback oil import goals is very strong worldwide, therefore the govern-
ment has decided to revise this plan by substantially reducing the oil import figures.
The head of the Resources and Energy Office added: "There were a few special
reasons in 1980 such as general slowdown in business activities and shortaqe of oil
supply due to the Iranian-Iraqi war which contributed to the reduction in oil import,
thus it will be unreasonable to expect to reduce the 1981 oil import to the level of
1980." However, it is considered feasible to achieve the 1981 import goal set in
1980, or an amount of 5.2 million barrels a day (approximately 300 million kl a
year; anticipating that the 1981 oil conservation target of 25 million kl will be
met) which is well below the 1980 planned import figure.
Along the same line of thought, the 1985 import quota of 6.3 million barrels a day
is expected to be reduced significantly. It appears very likely that the quota
will be on the order of 5.7-5.8 million barrels a day. The MITI will be explainin~
the outline of this guideline on 23d at the Consolidated Energy Measure Promotional
Cabinet Meeting. It will then publish the plan in March or April.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
Petrochemical Industry
Tokyo NIKKEI SANGYO SHIMBUN in Japanese 23 Jan 81 p 10
~ext7 The Association of Petroleum Industry (chairman: Takeshi Dokata, president of
Sumitomo Chemical Industry) on the 22d summarized the raw material situation, inter-
national competition, and overseas investment related to the petrochemical industry
and also what the petrochemical industry ought to do in the future. This report was
compiled by a society for the study of problems related to the petrochemical
industry (chief investigator: Tsutomu Shudo, managing director of Mitsubishi Petro-
chemical Industry) over a period of a year. According to this report, the specific
weight of the material cost in the total cost is rising rapidly and the difference
in the material cost is eroding Japan's competitive edge in the international com-
petition of the petrochemical industry. The report pointed out that the most important
problem today is how to obtain the raw material cheaply. As countermeasures, the
report suggested that we must eliminate Japan's institutional factors which raise
the cost over the international price on the one hand, and try to import intermediate
products at moderate cost by cooperating with overseas manufacturers or by overseas
operation on the other. 25
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The outline of the report is as follows:
Analysis of the Operational Environmet~t
1) Resources and Energy: What came out at the end of the first and the second oil
crises was not the "shortage of oil" but the "fear of shortage" and the "inflated
price." Therefore, the problem is not so much one of "supply insecurity" but of
"price inflation." The greatest problems faced by Japan's petrochemical industry
today are the inflating raw material cost an8 the widening of the cost differential.
2) Petrochemical Raw Material: Worldwide the main raw material is naphtha. Even
in the United States, the proportion of ethane used as raw material is declining in
favor of naphtha and light oil. Increasing use of new energy resources such as
tarsand, coal gasification and coal liquefaction plus nuclear power and coal will .
soon produce surplus heavy oil. And as the technol.ogy of heavy oil cracking is
improved further, production of naphtha as a byproduct will also increase. Moreover,
if the demand for gasoline remains low while use of ethane and LPG as raw material
increases with the supply of natural gas liquid (NGL), there is a strong possi-
bility that surplus naphtha may be created by 1990.
The ratio of the cost of imported naphtha (approximately equal to the international
price) to the cost of imported crude oil varies as follows:
1) During a period in which the pric'~ oE crude oil is stable, the relative price of
naphtha (the ratio of naphtha price to the crude oil price) will be low.
2) During a period of oil crisis, the relative cost of naphtha will rise sharply.
This is due to the fact that~the supply and demand of naphtha is quite loose under
normal circumstances. When surplus naphtha exists its cost reflects the fact that
it is a byproduct of manufacturing gasoline. When there is a shortage of naphtha
its price is the price of gasoline less the cost of reforming or more. The
lzmiting nature of naphtha is reflected in its price in the movement on the Rotterdam
spot market, while the international price of naphtha is considered to be based on
the long-term contract price of the European chemical firms. ~
3) Overseas Petrochemical Industry: The United States has a strong competitive edge
over the European countries because it is able to purchase naphtha $50 per ton
cheaper and ethane $90 per ton cheaper. In the background of this is the U.S.
energy price control policy. However, this price differential will diminish after
the decontrol of energy prices (decontrol of oil prices will become effective in
October of this year and decontrol of natural gas prices, in 1985). Reduction in
the use of ethane as raw material will be significant. The U.S. predominance in
olefin products will diminish after 1985. In the aromatic products, the competitiveness
of Japan-U.S.-Europe will become more evenhanded even sooner.
In Europe, naphtha remains in the main current as in the past. If a country with
ethane resource were to begin its petrochemical industry based on ethane, it
could arouse a great competition in the product price. However, the world's ethane
resource can satisfy less than one-fourth of the total ethylene demand of the
world in 1990, and the rest must be supplied by ethylene manufactured from naphtha;
light oil and LPG.
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4) Present State of Japan's Petrochemical Industry: There are problems related to
raw material and many other things. Japan's domestic naphtha is more expensive
than the international price during a stable period and less expensive during a
period of oil crisis. Japan ig different �xom the West in that naphtha may not be
imported by the petrochemical firms themselves (administrative directive) so that
there is a lack of power in negotiating price and the market mechanism fails to
work in thrs instance. The price is determined in Japan by a system completely
independent of the international price. When a system in which naphtha may be imported
freely is established, the price.o� domestic naphtha will also follow the interna-
tional price. A price system linked with the international price is desirable from
the viewpoint of maintaining an international competitive edge.
A principle of tax-f ree raw material exists internationally. However, Japan's
petrochemical industry is subjected to the impact of import tax and oil tax. The
total tax in 1980 was estimated to be as much as 38.8 billion yen. At the same
time, there is a mandatory stockpiling of raw materials and its cost was estimated
to be as much as 24.4 billion yen in 1980. Furthermore, naphtha is stockpiled in
the form of crude oil and there is no assurance in the stability of the naphtha
supply so it cannot be used as a powerful weapon by the pAtrochemical industry.
Moreover, the practice by some electric power industries of burning naphtha and
crude oil as raw fuel must be phased out as soon as possible from the viewpoint of
effective utilization of these resources.
The domestic c;~mand for ethylene was significantly less in 1980 than in 1979. In
addition to the actual drop in demand, we can also cite the effects of a cool summer
and a reaction to the false demand as the reasons. A reduction in the inter-
national competitive edge due to high material cost resulted in a reduction in
export and an increase in import. These forces caused various ethylene~facilities
to operate less.
In addition to a decrease in domestic demand for petrochemical products. A
significant drop in export to the Southeast Asian countries, and inflow of basic
chemicals, Japan's petrochemical industry, which is in a bind as a result of a raw
material cost which is higher than the international price and a product price which
is comparable with the international price, has the following problems as well:
low profit, low equity capital ratio, aging equipment, excessively competitive con-
stitution, and a research and development investment which is only one-fourth that
of the United States.
Future Image of the Petrochemical Industry
A petrochemical industry based on ethane has a strong competitive edge as far as cost
is concerned but it is limited by the raw material resource. Therefore, the petro-
ch~mical industry of the world is overwhelmingly based on naphtha--a raw material
derived f.rom oil. If Japan's getrochemical industry is to survive in such an
atmosphere it is absolutely necessary that its industry be able to procure raw
material at a cost comparable with the international price. Since there does not
seem to be insecurity as far as the availability of naphtha is concerned, with
domestic naphtha more emphasis ought to be put on its price than its volume. And
if there is still a shortage of naphtha after the domestic naphtha and the imported
naphtha are put together, the shortage ought to be made up by importing the inter-
mediate product at the international price. This is what will enable it to cope
with the internationalization of the industry.
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Furthermore, those products with staall added values ought to be imported from the
oil-producing countries in the form of either intermediate or final products at low
cost. One disadvantage of overseas operation is that Japan will lose its economic
independence. A desirable choice is to maintain a proper balance between the export
of products and overseas operation so that at least the domestic demand on petro-
chemical products may be made self-sufficient. To regain the competitive edge, the
industry must strive to diversify the raw material at every level of operation,
develop new technology using new raw material, practice strategic purchasing and
stockpiling of the raw material, produce distinguished products and products with
high added values. ~
Suggestions Concerning Raw Material Problem
To the administration: 1) the regulation that naphtha may not be freely imported
(a question of "impoxt right"), 2) the oil tax and custom's tax levied on the raw
material--naphtha, 3) mandatory stockpiles, and 4) use of crude oil and naphtha as
raw fuel--system, restrictions, and practice peculiar to Japan--ought to be
improved or abolished. An administrative special treatment measure is not necessary.
Improvement or abolition of the aforementioned regulations is necessary in order to
maintain an international competitive edge. The petrochemical industry on the
other hand must strive to solve its raw material problem and put more�effort in
its operation.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
Cooperation in Oil Industry
Tokyo NIKKEI SANGYO SHINBUN in Japanese 29 Jan 81 p 3
~ext7 Seven months after the pending question of capital coalition between Daikyo
Oil Company and Ajia Oil Company had surfaced we were able to see th~~ final settlement.
The president of Kyodo Oil Company, Hiroshi Ohbori, the president of Dai!~yo Oil
Company, Zentaro Nakayama, and the president of Ajia Oil Company, Ryutaro
Hasegawa, the concerne~? gathered on 29tr ar.~? signed an agreemen* ~ncluding
transfer of assets in the presence of Minister Tanaka of the MI~t~I and Secretary
Moriyama of the Resources and Energy Office. As a result, the Ajia Oil Company
has now separated itself from the Kyodo Group and joined the Daikyo Group. Taking
a clue from this coalition, more and more soft linkages are expected to take place
in Japan's oil industry circles regardless of foreign capital group or national
group. The structural changes brought about by the 1973 oil crisis have been slowly
- but steadily spreading over the entire oil industry. The national group in
particular will probably have to employ every available means in order to strengthen
its constitution in the future. In that sense, this coalition drama should ring
an alarm for the companies belonging to the national group (reporter Mamizu).
Eight Shares Transferred to Tokunaga
The contents of the agreement are as follows: 1) Daikyo will gain 48.7 percent of
Ajia's share and Ajia will join the Daikyo Group. 2) Kyodo and Ajia will settle
their shares between themselves and Ajia's personnel dispatched to Kyodo will be
withdrawn. 3) The products of Ajia will be handled by Kyodo as in the past.
4) Eight shares of Ajiakyo Oil Company (headquartered in Tokyo; president:
Ryutaro Hasegawa; capital: 9.6 billion yen) which is jointly invested by Ajia and
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Kyodo, corresponding to 0.1 percent of the stocks out of the 33.4 percent of total
stocks owned by Kyodo will be transferred to Kuji Tokunaga, president of the Petro-
leum Public Corporation, and 5) Kyodo wfll cooperate with the Ajia-Daikyo group on
- various matters including crude oil supply. The contents are basic.ally in agreement
with the arbitration plan suggested by MITI. The problem concerning Ajiakyo stocks
for whic.h the Daikyo-Ajia side showed disapproval was solved by the introduction of
Tokunaga, president of the Petroleum Public Corporation, into the picture so that
the veto power over any special resolution could be retained by Kyodo.
The eight shares (equivalent to 0.1 percent of the stocks) which could affect the
~ special voting power of Kyodo which was the focal point of disagreement must be
transferred. Several names were given as candidate for recipient, including
Yoshihiro Yoneyama, president of Federation of Economic Organizations ~E07; Toshio
Tsuchimitsu, former president of FEO; Yoshimitsu Fujita, president of Petroleum
Problem Investigation Committee of Liberal Democratic Party; and Tokunaga, president
of the Petroleum Public Corporation. Tokunaga was chosen as the recipient even-
tually, because 1) he is the elder OB in the MITI; 2) he is well-versed in the
situations inside the oil industry, and 3) he is an impartial third party. The
shares are to be owned strictly by the private person of Tokunaga and not in its
capacity as the president of the Petroleum Public Corporation. Therefore, there
will be no danger of forming any special relationship between the Daikyo-Ajia
Group and the Public Corporation.
After the agreement was signed by the concerned parties, Presiden~ Tokunaga said:
"I understand that any problems related to Ajia will be solved peacefully among those
concerned. I will take good care of these stocks entrusted to me."
Details by the End of March
The Immediate Problems
zn relation to the final agreement among the three parties, thern are still some
details that need to be ironed out in future negotiations. These ~etails include
settlement of the Ajia stocks, a contract concerning the dealing of oa,l products
produced by Ajia and Ajiakyo, and the use of a distribution base at the Ajia Yokohama
Refinery by Kyodo. ThA concrete details of these contracts will be drawn up before
the end of March by ~,~n investigative committee represented by both sides--Kyodo
and Daikyo-Ajia. About the length of the contract concerning the dealing of oil
products, Kyodo wants a 10-year period while Daikyo-Ajia wants a 5-year period. There
is also disagreement on the prices; Ajia prefers.Kyodo's settlement of account rule
while Kyodo insists on settlement of account rule minus alpha. A similar problem
exists even on the volume of dealing. Some expressed doubt that the details can be
ironed out before the end of Match. Furthermore, President Ohbori had expressed
that "after the separation, supply of crude oil to Ajia will h~ve to change of
rourse," hinting that crude oil supply to Ajia will be rec'.uced. Together with the
contract concerning dealing of the products, the question of who will be responsible
for the crude oil supply constitutes another focal point. This problem
solved in conjunction with a contractual adjustment with Daikyo which deals 30
percent of Fuji products and 42 percent of Shikajima products.
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On the other hand, how the 27.2 percent of stocks returned by Ajia to Kyodo will be
distributEd among its shareholders is also worth watching. As shown in the diagram,
Nippon Kogyo owns 40.8 percent of the Kyodo stocks. Sappose 27.2 percent were all
distributed to Nippon Kogyo according to its refininq capacity, its total stockholding
- would exceed the 50 percent mark and a"Nikko-Kyodo" image would become very
strong. Nikko is a member of the group since Kyodo was first organized in 1965.
Now that Ajia has separated itself from Kyodo following in the footsteps of Toa,
Nikko is showing more color these days. It is generally considered improper for
Nikko to become too prominent.
- When Toa separated itself from the Kyodo Group, President Ohbori raised the iiivest-
ment rate of Fuji and Shikajima significantly while raising that of Nikko and Ajia
only slightly. By doing so, he was able to avoid the criticism of "Nikko-Kyodo."
This time too as in the pa~t, the investment rate of Fuji and Shikajima can be
raised substantially or the stocks may be distributed among the 21 financial insti-
tutions which hold 1.9 percent of the Kyodo stocks.
Extension of Industrial Bank Conception.
rrom now on, Ajia is order the Daikyo Group investment-wise, but a greater part or
even all its products will be sold as in the past through Kyodo. This arrangement
appears to be a desperate measure and such an irregular form of arrangement is
unhealthy from a long- to medium-range point of view. Although the idea was to
avoid giving a shock to the existing sales system, it is inevitable that a link
between the production and sales departments of Daikyo-Ajia will grow stronger in
time.
The refining capacity of Daikyo-Ajia is 480,000 barrels a day, amounting to 8 percent
of the national capacity. It occupies third place in the national group after
Shukko Kosan and Kyodo and in front of Maruzen (see Table 1). Its sales share is 5.1
percent (1979 figure). If the products of Ajia were to be added immediately, a gap
between production and sales will be created. That is why the Ajia products will
be sold by Kyodo for the time being so that the Deikyo-Ajia merger may take off
smoothly. Fully aware of this, President Nakayama expressed: "They would like to
coordinate matters related t~ the import of crude oil and the allocation of tankers
with Kyodo in the meantime."
At this juncture what appears to be most uncanny is the move taken by the Japan
Industrial Bank, a major backer of Daikyo. Various plots of the bank have been
talked about openly and in private. Some have even gone so far as to label it a
"representation war between the MITI and the Industrial Bank." President Nakayama
insisted: "Under no circumstances did Daikyo act according to the command of the
Industrial Bank. Besides, the bank supports both Daikyo and Kyodo. It cannot team
' up with either side."
However, the head of the Industrial Bank has been heard to say: "The oil companies
belonging to the national group are desirably formed into a number of small groups:
Shukko Kosan as a group and the rest formed into two or three groups." Once, an
idea of coalition between Maruzen-Kaikyo-Ajia was advanced by the Industrial Bank.
There is no doubt about the capital coalition drama enacted this time being right
on the extension of the idea advanced by the bank. In this case, the future develop-
ment of Daikyo-Ajia coalition is interesting to follow.
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Toward Internationalization and Open System
The Future of the MITI and Kyodo Oil Company
After the signing of the aqreement by the three parties, the head of the F.esources
and ~nergy Office of MITI said: "From now on, every enterprise must strive to improve
quality through cooperation with other groups unprejudiced by the framework or
affiliation of the group." He has thus made it clear that "soft linkage" am6ny- a11
oil companies regardless of their affiliation with the national group or the
foreign capital group will be sanctioned in the future.
This signals a turnaround in Japan's oil policy from preferential cultivation of
the national policy company Kyodo. It is awkwardly explained that "it is not so
much a loss for Kyodo but a gain for the other groups." As symbolized by the view
held by the.head of the Resoutces and Energy Office immediately after th~ second
oil crisis that "a good cat (oil company) is a cat which can catch a mouse (crude
oil) no matter whether it is a black cat (foreign capital) or a white cat (national),"
the recent policy makes no distinction between the national group and the foreign
capital group. Though a little too late, the ofl industry circle is also entering
the age of internationalization and an open system.
However, it does not appear that MITI has any special plans for the future oil
policy now, especially about strengthening the constitution of the oil companies.
The subjects over which cooperation among the groups is most urgently in need today
include the crude oil supply and the heavy oil cracking technology. Even in this
area, no concrete visions which will drastically change the status quo can be con-
ceived.
Rather, the MITI policies seem more inclined toward letting the private sector take
the initiative on matters related to coalition. The capital coalition drama enacted
this time appears, after all, to be the capture of 48.7 percent of Ajia stocks by
Daikyo. From the very beginning, there were many in MITI who insisted that
transaction of stocks ought to be done by private firms and the administration
should stay out of it." This was agreed to by Kyodo as well which was under strong
support by MITI. Kyodo cannot help but to undertake the task of strengthening its
own constitution just as any other oil company.
Strengthening of the Operational Base--An Urgent Task
The Lesson to be Learned from this Capital Coalition Drama
The reasons why this capital coalition drama dragged on and on for as long as 7
months may be boiled down to the following two factors: All parties concerned
exchanged shouts from the very beginning and failed to talk to one another calmly
and all parties were too conscious of their faces. However, the reasons may be
more deeply rooted. When the fresh Sakade Refinery of Ajiakyo (refining capacity:
150,000 barrels a day; 1 barrel = 59 gallons) was completed in 1973, it was only a
while before the first oil crisis was to strike. At that time, not only Ajia, but
every other oil company was in a high growth period and demand for oil was expected
to grow vigorously. Therefore, when the demand for oil decreased because of the oil
crisis, Ajiakyo did not know what to do with its newly built facility and its
cumulatfve debts inflated at one time to as much as 38 billion yen.
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One company which was in worse shape than Ajiakyo was Toakyo (Chita Oil Company
today; refining capacity: 100,000 barrels a day) of the same Kyodo Group. The
facility was completed in October of 1973 immediately before the oil crisis was to
strike and by the same reason its cumulative debts surpassed 40 billion yen. The
Toakyo reconstruction project was therefore given priority over Ajiakyo within
the Kyodo Group and Ajiakyo was shelved while Toakyo was given priority treatment.
In the meantime, there was a change in the presidency of Kyalo and the business of
Ajiakyo gradually became better so that th~ Ajiakyo problem did not surface then.
However, President Hasegawa of Ajia sought cooperation with oil companies outside
the Kyodo Group based on the reasoning that "to establish the operational base, the
operation rate of the refining facilities of Ajia and Ajiakyo with a total
refining capacity of 275,000 barrels a day must be significantly raised," and
Daikyo, which was operating under a reversed production-sales gap (sales share
exceeding the refining share), caught his attention. Ajia and Daikyo were already
in a business cooperation relationship in such matters as entrusted refining and
accomm~dation of stockpile tanks as early as June of 1979 while reconstruction work
of Toakyo was underway. They entered into a capital coalition 1 year later by
timing it with the conclusion of the Taokyo reconstruction project.
If the first oil crisis brought a sense of crisis to the members of the national
group, the second oil crisis triggered by the political change in Iran aroused a
determination in them to take whatever action that was necessary to overcome the
situation. As can be seen in Table 2, the examples of capital coalition inside the
oil industry circles have increased rapidl~ in number since February of 1979 when
the second oil crisis struck. These are caused by the changes that have taken place
in the environment surrounding the oil industry. Take the case of Shukko Kosan
purchasing Okinawa Refinery stocks from the U.S. Gulf Oil, for example. Okinawa
Refinery was originally built by Gulf in 1970 so that it cauld sell crude oil to
Japan. When it could no longer supply the crude oil, the Okinawa Refinery stocks
were sold to Shukko Kosan which was a partner in the venture.
The reason Kyodo Group is so conspicuous during the talk of capital coalition is
the fact that it had aggressively expanded its refining facilities during the high-
growth period. Other groups of the national group will have to cope with a similar
problem sooner or later. It is quite obvious that refining facilities with a
total capacity of 5.94. million barrels a day nationwide are no,longer needed nnw
that the total 1980 oil import including crude oil and oil products was down to 5
million barrels and the figure for this year can only be.crawling sideways. In
additian, the oil-producing countries are expected to export more oil products and
less crude oil in the future, so that surplus facilities will continue to increase.
- The national group is more handicapped in the area of crude oil supply than the
foreign capital group. Although they may be able to obtain all the oil they need,
they must often rely on the more expensive spot market oil. Therefore, the national
group which has a smaller share of the imported Saudi oil than the foreign capital
group is obliged to buy crude oil costing $3-$5 more per barrel.
The 1980 mid-year period account (June-November, 1980) published by Daikyo on the
f.inal day of signing indicated a sale of 545 billion yen with a profit of only 400
million yen. In contrast, the top foreign capital oil company, Nippon Sekiyu, made
a profit of 60.5 billion yen in the same period of time.
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The foreign capital oil companies were said to be smiling while casting a side
glance at the confusion of the capital coalition drama played by the national
group. However, after things have settled down, not much has changed in the status
quo, and some consider that the status of foreign capital oil companies is even
more secure. In order to strengthen their ope~ational foundation which appears to
be crumbling under their feet, it is time fo~ the oil companies belonging to the
national group to search in earnest every available means for survival toward the
21st century.
New coalition relationship between Kyodo Group and Daikyo Group
33. 33 ~
'r i'�' ~
- 61 6hita10011 40.8i 22.$\ 7.6 `
i
_ . 7 i Fu
'~i Oil, Shika 'ima, Oil
N2 , on Ko o~7 2~i~ 33.3 ~2~
I Tokunaga
7�0 it 0.1~
A ia Uil~ 66.6 --~A 'ia o Oil
(12.5 15 zi .6
~ 15.0
48.7 /
\ Dai21 o Oil
~
Investment relationshipi ilumbers indicate investment ratio
(:ancelled investment relationship
Petroleum wholesale company Petroleum refining company
i'~umbers in parentheses indicate refining capacity in 10~000 barrels a day.
Table 1 Strength of Japan's oil company groups ~
National group Refining share Sales share
Shukko Kosan 15.2 15.2
Kyodo Oil 14.2 13.9
Daikyo Oil 8.2 5.1
Maruzen Oil 6.6 8.0 ~
Kyushu Oil 2.9 2.1
Taiyo Oil 1.1 1.2
Fuji Kosan 1.3 0.8
Teiseki Topping 0.1
Total 49.6 46.3
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For~ign capital group Refining share Sales share
Nippon Oil 15.1 18.9
Shell Oil 11.6 11.9
Toa Fuel Industry 11.5 12.1
Mitsubishi Oil 8.0 7.6
General Oil 4.2 4.0
Total 50.4 53.7
(Note) Sales share is based on 1979 fuel oil sales of 233.4 million kl. Refining
share is based on a total refining capacity of 5.94 million barrels a day.
Table 2 Examples of recent capital coalitionin the oil iridustry circles
September, 1978 Maruzen Oil and U.S. Union Oil capital coalition dissolved.
General Oil and Exxon capital coalition.
August, 1979 Toakyo Oil joins Nippon Kogyo (changes name to Chita Oil later).
Toa Oil joins Shell-Showa Group
October, 1979 Maruzen Oil and Kansai Oil merger.
.Tune, 1980 Shukko Kosan purchases Okinawa Oil Refinery from U.S. Gulf Oil and
Mitsubishi Chemical Industrys Okinawa Oil joins Shukko Kosan.
July, 1980 Ara~ia Oil becomes No 1 shareholder of Fuji Oil (from 10 to 19$).
October, 1980 General Oil absorbs General Oil Refinery and General gas.
December, 1980 Nippon Oil increases its holding of Kyushu oil stocks from 2.75
to 10$.
January, 1981 Ajia 0i1 joins Daikyo Oil.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
Interviews with Energy Chiefs
Tokyo NIKKAN KOGYO SHIN~UN in Japanese 2 Feb 81 p66
~nterview with Taro Nakayama, Director General of Administratives Affairs, in the
Prime Minister's Office; Shingo Moriyama, Head of the Agency of Natural Resources
and Energy of MITI; and Chikara Watamori, Director of the New Energy Comprehensive
Development Organization; Date and Place Not Specified7
_ ~ext7 Energy conservation is a national concern for Japan which depends on imported
oil for 99:7 percent of its oil needs. Consciousness of the need for energy con-
servation has slowly but steadily permeated the private sectors and business
circles, and has begun to show some results. In its recent Consolidated Energy
Measures Promotional Cabinet Meeting, the government decided the 1981 energy con-
servation consolidation measures centered around an energy conservation target of
25 million kl a year. Both the government and the people are expected to exert
themselves more than ever for success in this energy conservation campaign. In
addition to be conservation efforts, both governmental organizations and private
sectors are also expected to make a significant progress in research and develop-
ment of alternative energy and new energy.
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Therefore, in relation to the energy conservation month which began on the lst,
_ questions relative to the methoc3s for promoting energy conservation and the
directions of alternative and new energies development were brought before the
following three governmental officials: Taro Nakayama, secretary of general affairs,
Office of the Prime Minister; Shingo Moriyama, head of the Resources and Energy
qffice of MITI; and Chikara Watamori, director general of the Consolidated New
Energy Development Organization.
LQuestion7 What aspirations do you have concerning the energy conservation policy?
/Aakayama7 The 1980 energy conservation tasget was 25 million kl and the actual
saving was 40 million kl. We owe this achievement to the energy conservation
policy and especially to the proper administrative instruction of MITI. The target
for this year is set at 25 million kl and we would like to forge ahead in order to
achieve this goal. While energy consumption in-.the United States is centered around.
the national life, the proportion in Japan is industrial production second and
national life first. Conversion from~oil-burning to coal-burning furnaces carried
out by the cement manufacturers and utilization of waste gas carried out by Sakai
Iron Work of Shinnichi Iron and Steel have contributed significantly to the con-
servation of energy. Sakai in particular had greatly impressed the visiting British
members of Parliament.
The ene.r,gy conservation efforts by the governmental offices are insufficient com-
pared with the private sectors. A liaison conference attended by the concerned
offices was held in November of 1980 and various energy conservation efforts were
stipulated. Some of the specific topics stipulated include the following. Design
oE new public buildings must be based from the standpoint that oil will not be
used. Energy conservation commemarative stamps will be issued. Energy conservation
public relation activities will be developed in the metropolises as well as in ~he
districts. These measures and activities will be pursued fully and continuously
in the future.
~uestion7 How will the alternative energies such as nuclear power and coal be
developed?
LNakayama7 There is limit to how much conservation can do, so that development
of alternative energies is quite necessary. Nuclear energy, no doubt, is important
but it takes time to develop. The leadtime is said to be 10 years. Therefore,
development of coal ought to be emphasized for the time being. Today, oil supplies
73 percent of the total energy requirement. In the electric power industry the
proportion is 46 percent. However, there is a problem: we have to depend on the ~
imported coal. Domestic coal is 8,000 yen per ton more expensive than imported
coal. We must think about how to develop coal in such countries as China,
Australia and Indonesia and import these coals stably at low cost. However, I do
not mean to slight nuclear energy. The electricity rate of Kansai Electric Power
is the lowest in Japan today, and 20 percent of their total power generating capa-
city is nuclear. On the other hand, Okinawa Electric Power is 100 percent oil, so
that its rate is naturally high. Okinawa is having difficulty attracting industries
to locate there. They are trying many different ways to convert from the use of
oil.
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Accelerating electric power source location is another urgent task. The Liberal
Democratic Party has established a headquarters for the promotion of electric
power source location and begun to tackle this problem in easnest. The problem
concerns maintenance after the promotion period expires. That is to say that after.
a period of 5 years, the electric power source location reverts to the district.
IF a gymnasium or a park was built by a grant, they have difficulty with maintenance
r.ost after the period expires. Therefore, we must study and develop a system of
assistance in proportion to the size of the power source. We must also have a new
understanding of lowhead hydropower generation. This is the so-called local energy.
This type of energy source is especially suitable for rural villages. Oil ccnsumed
by rural villages today occu~ies 10 percent o� the total requirement. The prc~?em
in this case is the present system of law. Namely, no matter how small the scale
of power generation, the electricity generated must be sold to the nine major
electric power systems and then resold by them. We ought to change this law so tl:at
the electricity generated by the lowhead hydropower generation may be used directly
locally. Besides these, we must also establish steady a LNG supply system, canstruct
high speed breeder reactors, establish uranium recycling systems, and carry out
surveys to map the geothermal distribution. Talking about geotherms, we have diagrams
for the hot spring distribution but we do not have diagrams for the geothermal
distribution. We ought to carry out a nationwide survey of geothermal distribution.
[~uestion7 In this age of tax increases, an energy conservation investment tax
reduction is to be implemented; haw is this applied and what are the considerations
given to the medium and small enterprises?
' LAakayama7 According to the opinion of business circles, in order ta give incentive
to the development of an alternative energy such as solar, "financing is ineffective;
tax reduction is more effective" is the general consensus. We are expecting a huge
policy effect from the energy conservation investment tax reduction law. As a
result of this tax law, the raw s~aterial price is expected to be lower. By
supplying raw materials ta the medium and small enterprises we believe that the
medium and small enterprise~ will be sufficiently benefited by this tax law.
Therefore, the investment tax reduction is beneficial t~ the large as well as to ~
the medium and small enterprises.
~ LQuestion7 How will the energy saving facilities and equipment be developed? .
LNakayama7 It is very important that the government, the industry, and the university
work together. On the part of government, the Industrial Technology Institute is
carrying out the development of new energies. Private enterprises have also taken
financial measures. The problem is the university. Universities insist on
"autonomy" and do not want to exchange with the outside. I think this is improper.
In the United States,. joint business-university research projects are positively
supported financially by the government. Since I came to occupy this office, I
tackled this problem and organized a council which will work to promote cooperation
among the three. Prime Minister Suzuki is also strongly in favor of this idea.
~uestion7 How will the international cooperation on matters related to energy con-
servation be conducted?
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LNakayama] The immediate problem is how to achieve an international cooperation on
coal liquefaction. In Japan, the investigation fund for "SCR-2" (coal liquefaction
project) has been appropriated. We must draw up specific plans as soon as possible.
West Germany announced recently that it would withdraw from this project. We must
decide as soon as possible which country will be responsible for this 25 percent of
the development fund. In relation to the development of coal, an "international
strategic" scheme must be drawn up as soon as possible. What moves ought to be
taken, including diplomatic ones, must be determined as soon as possible.
~uestion7 Although oil supply is said to be secure this winter, how do you assess
the oil supply situation today?
~ioriyama7 It is true that during the months of January through March when oil is
most needed, there is no problem about its availability so that we can tide over this
period safely. Price-wise we can also manage thanks for the high value of yen. In
the background of this is the oil stockpile of 107 days' supply by the end of last
December, which gave spiritual and psychological support. At the same time, energy
conservation has firmly settled in the consciousness of the people and the enter-
prises ~=e also aggressively pursuing rational energy usage and energy conservation.
During this period of increased oil demand, the actual oil consumption was 10 percent
E below the same period last year. This is not accic~ental but is a result of the
~ efforts by the people and enterprises as well as th~ governmental policies. We
are enjoying the good results that have come out of all these today.
LQuestion7 How will the situation be after Apri17
LNloriyam_aj' We are not totally confident of the situations after April, especially
the oil prices. At the OPEC conference held in Bali late last year, they agreed on
a three-stage hike of the oil price to a maximum of $41 per barrel. Since the lst
of January most OPEC countries have already raised their oil prices.
As a result, Japan's import oil price in January has risen $2 per barrel on average.
Since the price was $34.80 in late December, the price during the period of January
through March is clearly on the order of $37. This high oil price may also act as a
restrictive force.
If left alone, the crude oil price can only rise, so that~the peoples of oil-consuming
nations must strengthen their ef�orts to conserve energy and accelerate the develop-
ment of alternative energies.
LQuestion% On the 23d, a bill setting the 1981 energy conservation target at 25
million kl was passed by the Consolidated Energy Measures Promotional Cabinet Meeting.
Will more energy conservation measures such as this one be implemented in the future?
~Moriyama] If Japan's economy maintains a constant rate of growth on the order of
5.3 percent, the amount of oil required will also increase. So long as the growth
in energy flexibility as a result of energy conservation and the growth of oil
consumption remain constant, strengthening of energy conservation will continue in
its present form. We do not know when these two curves will cross.
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~uestio) Please tell us the aim for an increase o� 5 millian kl energy conservation.
LFloriyama7 Strictly adhering to the thermostat settings recommended for heating and
cooling, and turning off lights near a window, the people are doing their share of
energy conservation and w~ are approaching the phy~ically bearable limit. Therefore,
instead of inventing new ideas each yea~ and forcing upo:? the people the austere
lifestyle with encouraging shouts, we wish that what is being practiced today might
become fixed in people's lifestyles. Therefore, no furthe~ reduction is expected~
from the national life.
Only utilization of solar energy and introduction of gas air-conditioning are to be
included in the new policy for next year. We expect the support of the People.
~uestion7 That means the greater part of the 5 million kl of energy conservation is
expected to be borne by business circles?' .
LMoriyama7 Conversion to coal burning by electric power circles is progressing
steadily. Central to 1981 policy is the energy measure pr~motional tax reduction.
With the backing of this law and the alternative energy law and the energy conservation
law introduced last year, we expect that business circles will try harder.
~uestion7 Does energy conservation include the positive side--development of
alternative and new energies--besides conservation of oil consumption?
LMoriyama7 Yes it does. It is not so much to cope with the oil shock but to meet
the challenge of establishing a new energy structure. Both the industrial structure
and the structure of national life are requirec3 for reform.
LQuestion7 You have kept emphasizing the necessity of local energy resources including
"lighting the hand lantern of Gion with solar energy;" no doubt it is based on the
same idea.
LMoriyama] Ninety percent of the people live in the district, so that the energy
problem is not the Froblem of the central government but a problem much closer to
home. There are abundant energy resaurces all over Japan, such as rivers, waste
treatment, solar energy, and geothermal energy. But only shouting an encouraging
' word will not be effective. A mood to utilize locally available energy resources
has recently been running high in the districts. We should like to draw up govern-
mental policies which are in harmony with this mood so that we won't swing and miss.
~uestion7 What do you expectfrom business circl~s and the people?
LMoriyam_a/ Every business must believe that the source of competitiveness in the
future lies in overcoming the energy problem. The political measures are also
drawn up with the same belief. We hope that everybody will understand this intention
and work harder than ever. We wish that the people will not just endure but make
it a part of their lives. Energy conservation is meaningless unless it is carried
out honestly and lastingly.
Now that the budget has been approved, the business of your organization can
start in earnest, can it not?
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~ LWatamori7 Since this organization was established only in mid 1980, the formal
b~~dget requested for the organization is for 1982, because we need a budget with
blood circulating, so to speak. The 1981 budget overall was compact. Yet that
portion assigned for the field of energy was quite generous. This generous energy
t~~~c]get, tc~ be sure, was based on the viewp~int that the future development of Japan's
~conomy hinges on the successful solution of the energy problem. Therefore, I
personally have no complaint whatsoever about the budget and, at the same time,
feel keenly the weight of responsibility.
~uestion7 What are the outstanding features of this budget?
LWatamori7 The "accent" of the 1981 budget is that a large share is assigned to coal
liquefaction. According to a perspective of energy demand 10 years hence, nuclear
power, natural gas, and coal are seen to be the major energy sources. Therefore, it
is quite fitting to emphasize coal liquefaction today. The second accent is solar
photovoltaic power generation. This form of power generation is expected to become
practical 20 years hence, or 1990-2000. In order to be able to realize photovoltaic
power generation as an effective energy source, we must do the groundwork starting
right now. Utilization of geothermal energy is also expected to become practical 20
years hence. Therefore, its groundwork must also be carried as soon as possible.
LQuestion7 What are the problems and methods of developing these three energy resources?
~Watamori7 The 1980 budget included drilling two wells 3,000 meters deep as part of
a large-scale deep well geothermal development project. Drilling technology is
quite dif.ferent from that for drilling of oil. More severe conditions such as a
temperature as high as 500�C and high pressure are encountered. This will be the
first attempt to reach a depth of 3,000 meters in the exploration of geotherm.
y The future of coal liquefaction may take the form of liquefying coal overseas and
importing the liquid fuel. If coal is transported, the cost of transportation will
come to approximately 60 percent of the overall cost. It is more rational to
- liquefy coal near the mine and then transport the liquid fuel. Besides, coal contains
an ash component so that it does not make sense to transport the ash at high cost.
First of all, we must find a better method of liquefying coal. It is difficult to
tell the difference looking at ~he seeds. After the sprouts are transplanted into
pots, we can watch them grow and cultivate them. We are also undertaking a coal
liquefaction project jointly with the United States. Since it is too expensive to
carry out large-scale experiment alone on our own farm, we are riding the U.S.
wagon.
~uestion7 What are the differences between alternative energy and new energy?
~Watamori] Alternative energy is used to substitute for oil.. Nuclear energy is one.
New energy is energy yet to be developed. For example, the geothermal energy
exploited today is from wells ot no more than 800 meters deep and this energy belongs
to the category of alternative energy. However, when we are able to exploit geothermal
energy at a depth of 3,000 meters, this energy will be a new energy. Of the solar
energy, photovoltaic power generation will be a new energy source. 2 believe Japan
is leadinq the world in these technologies. Japan is poor in energy resources but
rich in hrains. Japan is probably one country in the whole world which is most
- urgently in need of the new energy. I believe that Japan is leading the world in
the area of new energy development.
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New projects introduced this year include the development of large-capacity coal
gasification plant. Large-scale windpower generation having a capacity of 1,000-5,000
kW range will also be studied. When an alternative energy evolves into something ~
much bigger, it becomes a new energy resource. L~z~ge-scale utilization of the ocean
energy can also be added to the list.
L�uestion7 As the oil situation become more and more critical, the necessity for
energy conservation is more keenly felt.
- LAatamori7 If I were a champion of enerqy conservation, I would push still harder.
Energy conservation must be continued ~nd even improved. However, conservation is
for what can be conserved,. but where energy is needed we must use it. There is no
need to harm one's eyes by studying by the light of fireflies. In order to develop
new energy, money, brains, and time ar~ needed. We must not be impatient, expecting
only an early restzlt. If we can contribute to the peace of Japan 10 years hence,
a large sum of money spent today will be worthwhile. Here is ~n example. A number
of wells were drilled without getting any oil. A few years later, more wells were
drilled in the vicinity with the same luck. For the third time a well was drilled
at the last spot available for drilling, and oil was found there. If we are afraid
of risks when we attempt to develop new energies, we will never win. I believe a
large sum of capital must be spent on this worthy cause.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981
Interview With Committee Chairman
Tokyo NIKKAN KOGYO SHIMBUN in Japanese 3 Feb 81 p 3
' /Interview with Hikaru Matsunaga, Chairman of the Energy Conservation Special Com-
mittee of the LDP, by Hiroshi Ono, Reporter, and Editorial Committee Member; Date
and Place Not Specified%
~ext7 To tackle in earnest the development of electric sources, LDP last week
established an Electric Source Location Promotion Headquarters (Chief: Yoshitake
Sasaki, former minister of MITI). Based on a viewpoint that "development of electric
source and energy conservation are two wheels of a vehicle" (Chief Secretary
Sakuranouchi}, the same pa=ty has been working on various energy conservation policies
through its Energy Conservation Special Committee. To find the view of its
chairman Hikari Matsunaga, a few questions were brought to him. (Reporter: Hiroshi
Ono, member of the editorial committee)
LQuestion7 How is the energy conservation line running these days?
LMatsunaga7 The greater part of energy used today is oil and no mistake about it.
You are quite aware of how critical the oil situation is. The political situations
of the oil producing countries are unstable and OPEC is constantly raising the price
of oil. It is not too much to say that the oil-consuming nations are threatened by
both quantity and price of oil. Conservatiori of oil is the only effective counter-
measure. As a result of this measure, oil supply has stabilized on one hand and has
shown a surplus on the other. In fact, conservation of oil has been proved to be an
effective decisive factor which stabili2es long-range oil supply and also suppresses
the price rise. In spite of the fact that oil supply is unstable today because of
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the Iranian-Iraqi war, we are able to maintain a stockpile of 107 days' supply
~ because a 10 percent reduction in supply is countered by a 10 percent conservation
so that a balance between supply and demand can be maintained. We can appreciate
the importance of energy conservatioh.
~uestion7 How is the development of nuclear power, coal, and hydropower as an
alternative energy progressing?
LPlatsunaga7 A considerably long period of time will be required before nuclear,
coal and hydropower can completely replace oil energy. In the meantime, the most
important thing is nothing but energy conservation. Reducing the amount of energy
consumed has the same effect as developing an alternative energy. This line has
been actually running for some time.
~uestion7 How is it done in specific terms?
[-Matsunaga7 If we compare the energy conservation efforts by industry, transportation,
and national life, we can see that energy conservation by industry is by far the
most advanced. Especially the manufacturing industry. This is why the industrial
products have a strong international competitive edge. Some one has said that
energy conservation is the only lifeline for the manufacturing industry and I concur
wholeheartedly. If we assign 100 to the 1973 energy cost required per unit pro-
_ duction, the 1979 per unit production energy cost has been reduced to 61.3 percent
for iron and steel, 75.0 percent for automobiles, and 75.2 percent for the aluminum
industry. These are the results of various energy-saving technologies developed
since we started to tackle this problem in earnest. For example, in the field of
iron and steel, thefurnace top pressure power generation, recovery of waste heat,
rationalization of the production process such as continuous casting process, just
to name a few. The important achievement made by the manufacturing industry in con-
serving oil resulted from conversion to the use of alternative energy. For example,
the cement industry converted from oil to coal burning. This way, it can save more
than 25 million kl of oil.
~uestion] These are the large enterprises, what are the guidelines for the medium
and small enterprises to achieve energy conservation?
LMatsunaga7 You may be aware of the policy of implementing investment tax reduction
in 1981. The medium and small enterprises will be benefited by this. It is
expected that new technology, improved equipment and other energy-saving facilities
will be aggressively introduced by the medium and small enterprises. The purpose of
implementinq this investment tax reduction policy is to strengthen the energy con-
servation effort one step further and to expand its range.wider in the medium and
small enterprises than in the large enterprises. ~
[~uestion7 What form of energy conservation is being contemplated in the field of
transportation7
/Matsunaga] In case of freight transportation, if the unit energy consumption by
railway is taken to be 1, then truck is 9.4, domestic shipping is 1.6. in case of
passenger transportation, if railway is taken to be 1, then bus is 1.4, passenger
car is 7.3, and airplane is 6.7. Although use of railway is highly desirable, it
_ cannot be made compulsory in a free economy. However, consolidated regulations can
be carried out. We need in the future a consolidated transportation system which
is based on the standpoint of energy conservation. We need it badly indeed.
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There are some noteworthy statistics about passenger cars. Namely, the percentage
of cars of 1,000 cc or less is 1' percent in .Tapan, 30 percent in France, and 50
percent in Italy. If it reaches the French level in J~pan, this alone is said to
amount to a saving of 5 million kl of oil. In fact, I noticed to my surprise that
there are more small cars abroad than in Japan. We will watch users' movement care-
fully in the future. I personally drive a small diesel car.
/~uestion7 How is energy co:lservation done in the field of national life?
L'~3atsunaga7 Restrictions on space cooling and heating and use of elevators, and
promoting introduction of solar systxms, both governmznt (public buildings) and
people (private dwellings) are getting the desired results. The government is pro-
viding subsidized and low interest loans in order to popularize gas air-conditioning
and solar systems. For the purpose of introdu~ing solar systems to public buildings
in 1981, 3.6 billion yen have been funded (for a project of 7.2 billion yen). To
the private sector, 1.8 billion of interest subsidy has been funded to provide a loan
at an interest of 5.5-6.0 perc:ent to be paid back in 50 years. As to the self-control
on privately owned cars; the private sectar is doing better than the government.
This situation must be corrected as soon as possible.
LQuestion7 Can we abide by the decision made in June 1979 at the Tokyo Summit that
we limit our import to 6 million barrels (a day) in 1990?
~iatsunag] The quota of "6.3 millicm barrels" represents the amount that we "may
import." It certainly will be diff.icul~ to try to get more. However, if we follow
the conservation line practiced today, I don't think the demand will far exceed
today's level of 5 million barrels a day so that a balance between supply and demand
is expected to be achievable.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981
~ Coal Use Policy
Tokyo NIKKAN KOGYO SHIMBUN in Japanese 3 Feb 81 p 3
LText7 As a link of promotional measures to introduce alternative energy, the MITI
has expanded the demand for coke furnace gas manufactured by v.arious city gas com-
panies to include the industrial consumers. Specifically, 1) starting next year, a
survey will be conducted to find out the industrial demand on coke furnace gas and
low calorie gas, and 2) a 3-year project will be launched to study and develop an
optimum process for manufacturing gases fit for industrial application. At present,
coke furnace gas is manufactured and sold by a number of major city gas companies
located in Tokyo, Osaka, Toho, and Hiroshima. Howeves, expanding demand to include
industrial applications cannot be done so easily because, first of all, its heating
value is low (4,500-5,000 kcal) and secondly there is no prospect for an expanded
coke market. MITI has decided, with the support of city gas industrial circles,
to put emphasis on populazization of coal gas for industrial application, because
coke furnace gas does not pollute and it fits perfectly with the planned expansion
of coal utilization.
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Survey of Demand and Development of Technology
Conversion of coal is an urgent theme in industry as a whole, but conversion has
not progressed significantly in all areas except for the iron and steel industry
and the cement industry. What yaakes conversion to coal so difficult for each indi-
vidual industry is the huge sum of money needed to purchase land and pollution pre-
vention equipment. In the meantime, various city gas companies are gasifying coal
and providing a fuel which is pollution-free. They do not have problems with the
manufacturing technology either. That is why MITI decided to popularize coal gas
for industrial application as a link in the expanding utilization of coal.
Inside the city gas industrial circles, the four major companies--Tokyo, Osaka, Toho,
and Hiroshima--manufacture and sell approximately 10 percent of the total supply in
the form of coke furnace gas. However, coke furnace gas is low in heating value,
only 4,500-5,000 kcal compared with 11,000 kcal for liquefied natural gas (LNG).
Furthermore, 70 percent of the weight and 80 percent of the energy of coke are
produced as byproducts of manufacturing coke furnace gas. Therefore, unless the
coke market is expanded and the heating value is raised, increased production of
coke furnace gas will not be practical.
However, according to a preliminary investigation made by MITI, the lc~tent industrial
demands for coke furnace gas include on the annual basis 203million m in Tokyo, 14
million m3 in Osaka, 87 million m3 in Toho, and 4 million m in the Shikoku and
Fukuyama areas. There is an opportunity to expand industrial utilization of coke
furnace gas as evidenced by an agreement between Tokyo Gas Co and Showa Electric
Industry for an expanded use of coke furnace gas.
IIased on these facts, MITI with the cooperation of the city gas industrial circles
will, starting next year, undertake a survey of industrial demand, development of
manufacturing method and supply format, and a feasibility study. In order to
facilitate conversion by the coke furnace gas industrial circles to improve their
coke furnaces and to lay special pipelines, the gas industry will be assisted by
the government. The users will also be subsidized with the coal conversion fund.
(;c~PYRIGHT: Nikkan Kogyo Shimbunsha 1981
Continental Shelf Exploration
Tokyo NIKKAN KOGYO SHINIDUN in Japanese 4 Feb S1 p 3
LText7 According to the "Fifth 5-Year pomestic Oil and Combustible Natural Gas
Resources Development Plan" which started in 1980, on average 15 exploratory wells
are to be drilled every year. However, in 1981 no more than six or seven wells
(including the Japanese-Korean Continental Shelf) will be drilled. These figures
are even smaller than the eight wells actually drilled in 1980. Two years in a
row Japan's Continental Shelf oil and natural gas exploration effort will fall short
of the planned level. Daclcground facts of this area that not much is expected of
this reserve, there is a lack of desire to develop it by the oil developing industry
because of the "good settlement of accounts" due to rising oil prices, and on the
practical side the unsettled drilling rig assignment adjustment. If these
situations prevail, the 5-year plan will end in failure. That is why the Resources
and Energy Office of MITI is trying so hard to ward off delay of the plan.
- 43.
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MITI Pressed With Taking Urgent Countermeasures
Development of oil and natural gas on Japan's Continental Shelf and drilling of
explaratory wells in particular is, as a rule, contracted to Japan's only drilling
contractor--Nipt~on Kaiyo Kussho LJapan Marine Drilling] Company. According to the
1981 contract, there are only four wells which ar~ "guaranteed" to be drilled
during the year.
These four wells consist of three wells located north and off shore of Naoezu off-
shore, north of "Aga," and one undetermined location along the coast of Niigata
Prefecture and one well located at the Japanese-Korean Continental Shelf. The
development of three wells located along the coast of Niigata Prefecture are all
planned by the Shukko Oil Company. Drilling of the two wells located north of Aga
and at the undetermined location will be done by the "Second Hakuryu Lwhite drago~"
of a semisubmergence type. Actual exploratory drilling north and offshore of Naoezu
offshore will be carried out by the mining-right holder--Shukko Oil Com~any.
Drilling will be done by.the "Fifth Hakuryu" which is in operation offshore of
Miyakojima in Okinawa and has a contract~to operate for 3 months in Philippines.
The drilling operation offshore of Naoezu therefore will not begin until June.
The operation at the Japanese-Korean Continental Shelf will also be done by the
- Fifth Hakuryu after the work north and offshore of Naoezu is finished. The work is
expected to begin around October. Nippon Kaiyo Kussho has four more rigs in operation
today. The "Third Hakuryu" and the "Fourth Hakuryu" will be operating offshore of
Indonesia all year long, while the "First Hakuryu" and the "Sixth Hakuryu" will be
retained in the Middle East for several more years.
Therefore, besides the four wells which will be definitely drilled, drilling of any
additional wells depends on the schedules of the Second Hakuryu and the Fifth
Hakuryu. Suppose after finishing the oper~tfons already scheduled, the two
Hakuryus can stay home and drill two or three more wells, the total number of
exploratory wells drillec7 in 1982 cannot be greater than"six or seven wel?.s (according
to the contract, in addition to one which is already scheduled, two more wells may
be drilled at the Japanese-Korean Continental Shelf.)
Assignment of overseas rigs as a countermeasure has been suggested after a negotiation
among the industrial circles and the persons concerned. The oil development enter-
prises pointed out on one side that a medium- to long-range plan ought to be made
and insist on the other side that the government ought to take some drastic measures
concerning promotion of oil development including the rig assignment problem.
MITI and the Petroleum Public Corporation are pressed with taking some urgent counter-
measures.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981
Geothermal Power Generation Plant
Tokyo NIKKEI SANGYO SHINIDUN in Japanese 4 Feb 81 p 5
LTcxt7 Much is expectPd ot geothermal power generation as one of the alternative
energy sources. Just as Arab nations are living atop the oilfield Japan is living
atop a volcanic belt, and geothermal energy is considered by many as Japan's No 1
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domestic energy resource which will yielc3 as much as you w~sh if you only exploit
it. In reality, however, our domestic geothermal power generation is under strict
control in connection with the natural environmental protection regulations.
Including those being developed today, thQ total facility capacity is only approxi-
mately 220,000 kW amounting to 5 percent of the world's total geothermal power
generation.
Seventy-seven Percent of World's Share
However, the strength of Japan's plant manufacturers is the mightiest in the
world today. They are exporting geothermal power generating plants one after another
to every part of the world. Today, jointly they hold 77 percent of the world's
share of the market, fully demonstrating the competitive edge of Japan's manufac=
turers of various heavy electric plants. In a recent geothermal power plant
negotiation involving a super large-scale (capacity: 440,000 kW), Cerropriet
Power Plant in Mexico, Tokyo Shibaura Denki was able to win the bid in the end.
Even the world's largest geothermal power generating plant--U.S. Geyser Geothermal
Plant--with an operating capacity of 900,000 kW today and a total capacity of 1.43
. million kW including the facilities that have been ordered, was almost completely
captured by Toshiba which won by pushing away the native General Electric Co.
There are many secrets to this strength, including first of all the rich experience
and business showings of various manufacturing companies. Geothermal power generation
employs a steam turbine to drive the generator just as any ordinary thermal power
generation. The difference lies in the nature of steam used. Unlike steam generated
in a boiler in an ordinary thermal power generation, the quality of steam used in
geothermal power generation is not constant. Depending on the location of the well,
it may be a hot water, or steam, or steam containing toxic gases and metals.
Generally speaking, the conditions are different from one location to another so
that a manufacturer with rich experience can obviously conduct himself better.
Although they are from medium to small in scale~ there are six geothermal power
generating plants operating in Japan today. Several sites are under development.
The quality of steam varies widely from steam only to hot water only. Once an order
for a large-scale plant such as the Geyser is filled, it becomes a business showcase
and the volume of orders tends to grow with a snowballing effect.
Though They May Be Somewhat More Expensive than the Westerri Group
The difference in technological strength is also quite significant. Geothermal
steam contains a corrosive mixture and its pressure is usually much lower than the
- vapor pressure of an ordinary thermal power generating plant. Much more steam will
- be required to obtain the same amount of output so that the piping tends to be
bulky. Therefore, a technology to clean the steam before use so that the power
generating plant may be made compact becomes indispensable. As far as accumulated
_ technological know-how related to the thermal power and nuclear power plants and
chemical plants is concerned, Japanese companies are definitely more dominant than
others. As a result, the operational rate of the power generating plant is said
to be in the range of 95-98 percent with very few shutdowns if the plant is manu-
factured in Japan, while the rate is on the order of 60 percent if it is manufactured
in England (major manufacturer). Although some may consider that a somewhat lower
operational rate can be tolerated because the fuel cost is almost nil, more and
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n~ore users are demanding higher and higher operational rate from the viewpoint of
"what would be the substitution cost if oil is burned?" now that the age of $40 crude
oil has arrived. That is why the plants manufactured in Japan are eagerly sought after
~~ven though they are somewhat more expensive than those manufactured by the Western
group.
- Market Characteristics Are in Japan's Favor
The market characteristics of a geothermal power generating plant are said to be
further in Japan's favor. While units of a million kW class are common in an
ordinary thermal power generating plant, the maximum geothermal power generating
capacity is of the order to 100,000 kW. The new market created each year is no
more than a million kW, equivalent to the capacity of a single nuclear power plant.
Although there is a bright prospect, the scale of the market is too small for the
world's giant manufacturers to be bothered. On the other hand, the load is too
heavy for weak manufacturers to bear because of technoloqical difficulties. In
this respect, Japanese manufacturers who maintain a close cooperative realtionship
with the electric power companies who are pushing for the development of alternative
energy are found to possess sufficient quantities of both the desire and the ability.
The Resources and Energy Office of MITI has included development of geothermal energy
as part of the Sunshine Project and last fall launched a New Energy Development
Organization which constitutes the nucleus of the project. On the other hand,
inside industrial circles, a number of enterprise groups have been formed, one
after another, the core of which consists of a plant manufacturer and a consolidated
commercial firm which undertake everything from exploration of a geothermal site to ,
- construction of the power plant. Thus, literally by the combined effort of the
government and the people, development of technology related to geothermal utilization
is being accelerated. The competitive edge of the Japanese manufacturers can only
be strengthened and never will it be weakened. (Reporter Nishioka)
(1~ ~~AS+-ti~~-~i-~'vx~ Key: 1. Manufacturers of geothermal turbines
2 f o,~u o,~ ~ and their share
3 cEC i.y . >~Z 18fl 80.653 45,137 86,500 48,400 99,500 55,900 107.2 107.2 115.0 115.1
D 1 i t' . i- 9 r~:l~ ~}k" 19 2g,2pg 79.551 45,000 122,000 54,000 147,000 160.0 153.4 120.0 120,5
�l~G~~l~t" 2~ - 178,248 - 214,300 - 245.000 - 120.2 - 114.3
DX I~~S 21 21,764 79,540 25,800 88,700 29,400 97.300 118.5 111.5 114.0 109.7
1~4J#1 22 20,149 74,553 ?A,100 83,000 27,500 91,000 119.6 111.3 114,1 109.6
~~ft~ 23 1,615 4,987 1,700 5,700 1,900 6,300 105.3 114.3 111.8 110.5
D~;fi~Ct~J{~~,4 24 - 50~418 - 65.500 - 78~300 - 129.9 - 119.5
~~~~~~R 25 1,481 16,071 1,680 20,000 1,800 22,000 113.4 124.4 107.1 110.0
Dbf(;~~ VTR 26 681 7,8?A 1,150 9.600 1,300 10,800 168.9 122.7 113.0 112.5
D.r~c~~A=rl~t~@t 27 203,580 24,395 234,000 30,500 269,000 36,600 114.9 125.0 115.0 120.0
�~~~~1tt" 28 - sz,oso - ios,ooo - ii7,~oo - iis.i - iii.o
�l~~C~.~Rh~l~('R*) 24 51,447,572 _ 191,943 64,000,000 214,500 67;000,000 221,000 122.0 i11.8 iG4.7 103.0
*1 1) Computers and related e~uipment, 2) electronic applied equipment, 3) medical
use electronic equipment, 4) desk calculators, 5) electric measuring equipment
(Table 4), 6) communication equipment, total (Table 4)
*2 Includes NC (numerical control) equipment
*3 Does not include high-frequency electric power application equipment, radio-
activity measuring instruments, or.medical use measuring equipment listed in
the Ministry of International Trade and Industry statistics
*4 Total of bodily phenomena measuring and recording equipment, bodily phenomena
observation and diagnosing equipment, health examination equipment, medical
data treatment equipment, nuclear medicine measuring equipment, medical use
television and applied equipment, and other electronic application equipment
for medical use. Ultrasonic application equipment is included partly under
ultrasonic application equipment and recorded twice.
Key:
1. JFY 1979 (actual record) 5. JFY 1981/1980
2. JFY 1980 (estimated) 6. Number
3. JFY 1981 (pro3ected) 7. Monetary value
4. JFY 1980/1979 8. Total of electronic equipment for
industrial use .
[Key continued on following page]
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9. Total excluding desk calculators 19. Computer application equipment
10. Computer and related equipment 20. Applied electronic equipment
11. Digital type 21. X-ray equipment
lla. Computer main body 22. Medical use
12. General use 23. Other
13. Control use 24. Ultrasonic application equipment
14. Peripheral equipment 25. Electron microscopes
15. External recorders 26. Broadcast VTR
16. Input-output facilities 27. Industrial use TV equipment
17. Communication control equipment 28. Medical use electronic equipment
18. Terminal equipment 29. Electronic desktop calculators
18a. Accessory equipmant ~ (tabletop calculators)
_ _ - ~ " ~ ~ ! _ z
1 r
_ . ~ldM~'i~
~ ~ ~
~k~mt8 , ;:'~7~'.- � . ~d . ~5,. {
3 ~;~L,g--~~ ~E~k~f1U(7796) 6*~ ' 'v-~~~.,
g, OEM(~'~41*) OF.M
. :g... ~ : :,.~r ` :1.:;'�~`i� .1,�;:;:~`.
~iff~K~ilA(5046}~~' . ~ .
8 'r~S l:;l~ TR11' "t~ , ~ BASF
OEM(~'!ClN~11~ ) ~
. . ~+4~- f. afi' =i}~; ~EM y ~ .
'1' : J i l~ ' ~ . . �1t . .
~ ~t ; ~ : g v ~ ~lYFPh *'l ~ ~v 9 r
OEM OEM
13
II 4:�~li'~i f i'.~ 1010% 7�~4t
i: c~:~X �v~7~r7~�:i~ ~~'Rxl
t'1-9~i~
F l i_ 10(1~ fit::2lt
{ . ~,I -esat
~17t~�7%
t ~--ytc~'
Figure 2. Japanese Manufacturers~ System for Exports to the West
Key:
1. American market 11. Hitachi, Limited
2. European market 12. Olivetti
3. Amdahl 13. Japan Electronic Information
4. Capital participation System
5. OEM (large computer) 14. 100% subsidiary company
6. Fujitsu 15. Items such as office computers
_ 7. Siemens 16. Nippon Electric
8. OEM (medium and smaller) 17. Mitsubishi Electronics America
9. Fujitsu TRW 18. 100% involved company
10. National Semiconductor 19. Mitsubishi Electric
COPYRIGHT: Nikkei-McGraw-Hill, Inc., 1981
2267
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Electronic Medical Equipment
Tokyo NIKKEI ELECTRONICS in Japanese 13 Apr 81 pp 267-269
[Article by Shigenori Miyata of NIHON KEIZAI SHIl~UN]
[TextJ Break in High Growth Rate
Electronic equipment for medical use (ME), which had continued its brilliant rate
of growth of 20-30 percent per year, slowed to 15 percent in 1980, and the ques-
tion has arisen whether a double-digit level of growth can be attained in JFY 1981.
That is to say, the X-ray CT (computer-aided cross-section photography equipment)
and ultrasonic-wave diagnostic equipment, which had been referred to as the "flower
type" ME, are now thought by many people to be undergoing a"lateral.rate of
growth."
i
It was the X-ray CT and ultrasonic diagnostic equipment which were responsible tor
this high ME growth rate during the past 2-3 years. Now, the number of X-ray CT's
in Japan has proliferated to the point where more than 1,000 units wexe in use by
the first half of 1980, and the ma~ority of maternity hospitals were equipped with
ultrasonic diagnostic equipment. Tl~en there was the incident at the Fujimi Mater-
nity Hospital in Tokorozawa city, Saitama Prefecture. This incident cooled users'
ardor for ME--particularly for %ray CT's and ultrasonic diagnostic equipment--and
had the effect of casting cold water on ME manufacturers.
Ultrasonic diagnostic apparatus has suffered a very large decrease in growth rate
in the domestic market. According to industry estimates, the sales volume of this
equipment during 1979 was 19 billion yen, which was a 46.2-percent increase over
the previous year. This total was expected to increase to 22.5 billion in 1980
for a 18.4-percent increase. It was further expected to increase by a double digit
value in 1981 if things went well, and at worst to undergo lateral growth.
The performance of 3apanese-made ultrasonic diagnostic equipment is such that it
is highly regarded throughout the world, and top manufacturers.of this equipment,
such as Tokyo Shibaura Electric and Aloka, have put great effort into exports, as
a result of which there has been a sharp increase j.n exports. The export value
of ultrasonic diagnostic equipment was about 7 billion yen in 1979, but this was
expected to increase to 12.5 billion yen (projected) in 1980. It was further ex-
pected that orderly growth would continue in 1981, and that ultrasonic diagnostic
equipment might develop to be the strategic export item in the category of ME,
outdistancing the other ME.
Feeling of Saturation of X-ray CT Market
The high rate of grc?wth of X-ray CT equipment was the result of the successive
marketing of low-co~;t equipment which was the top specialty of Toshiba, Hitachi
Medico, and SY?imazu Seisakusho. What used to cost close to 200 million yen per
unit was lowered to 3bout 50 million yen, and this can be said to have helped
create a"CT introdu~tion boom." However, there were already 1,200 of these units
- in use throughout the country at the beginning of 1981. Looking at this distribu-
tion in terms of a Fer capita basis, Japan's per capita availability of X-ray CT's
. .:55~~
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is even greater than that of the United States. This is why voices are heard in
the Ministry of Health and Welfare calling for regulation of these high-cost ME,
and there is a feeling of saturation in the R-ray CT field.
The market scale is expected to increase to more than 43 billion yen in 1980 an~'
come close to half that of X-ray diagnostic equipment (roentgen), which is the
largest among ME. Replacement demands are expected to start 2-3 years in the
future at the earliest, and there is a small possibility that this market will
continue this high rate of growth. Such being the case, the concern over the
growth of X-ray CT, whose weight certainly has increased, is that its decline
may drag down the growth of the entire ME market.
The same situation of a transition period between a high rate of growth and a
stable rate of growth also exists in patient observation equipment. Such equip-
ment is used for ICU (intensive care patients' centralized treatment facility)
and CCU (cardiac patients' centralized treatment facility) to monitor admitted
patients.. Accompanying the increase in admittance of older patients, there was
an annual growth rate of more than 30 percent in this equipment for the 3 years
up to 1980, but here again, the number of orders displayed a marked decrease from
the latter half of 1980 as the result of the Fu~imi Hospital incident. There
seems to be considerable feeling that JFY 1981 will experience a considerable de-
crease in the rate of growth. ~
High Growth Rate for Automated Cardiographic Analysis
The item in the ME market which still maintains a high rate of growth as befor.e,
even in the midst of present trends, is automated electrocardiogram apparatus.
There are two types of this apparatus: one incorporating a micro-computer, which
� spits out the analytical results on the spot; and a terminal type (Shindenkei
[literally, electric cardiac meter]), where the unit is tied by telephone to a
central computer which makes the detailed analysis. Both types are in great de-
mand. This market is expected to expand to 10 billion yen in 1980, and consider-
able growth is expected thereafter. On the other hand, the feeling of inadequate
power cannot be denied when the question arises whether this item can continue to
pull the ME market up.
Earnest sales confrontations are expected to begin in 1981 where the laser scapel
is concerned. Tlte selling point of this device is its ability to perform surgery
without loss of blood by utilizing laser beams. This is high-priced ME equipment,
costing ab~ut 30 millinn yen apiece, and many companies, headed by Mochida Seiyaku,
have high hopes for this product. The industry is holding to a dream which envi-
sions a 100 billion yen business in the future, but ~udging from the reactions of
users and from other factors, this does not seem to be an area where there will be
sudden expansion.
COPYRIGHT: Nikkei-McGraw-H111, Inc., 1981
2267
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Electronic Measuring Devices
Tokyo NIKKEl ELECTRONICS in Japanese 13 Apr 81 pp 267-269
[Article by Junichi Ogino of NIKKEI KEIZAI SHIMBUN]
[Text] Maintaining Growth Rate Close to 20 Percent
Electrical measuring devices (industrial equipment, electricity measuring devices,
electrical instruments) are being sustained by a strong demand i.n 1981 and seem
able to maintain a rate of growth exceeding 15 percent over the previous year.
More specifl.cally, orders for electrical measurement devices are expected to ex-
ceed 400 billion yen, and sales are expected to come close to 400 billion yen.
The factor most responsible for this increased demand is the favorable trend in
private industry for invasting in plant facilities in order to restructure the
plants. The policies aimed at cutting costs in order to compensate for the rising
cost of oil and the inte+-industry competition under stable growth rate conditions
are becoming more and more important to the various industries. The increase in
ordi:rs for measuring devices designed to abet energy conservation and power conser-
vation measures is spurring an expansion in the market for these instruments.
Industrial instruments, which make up more than 50 percent of electrical measuring
instruments, showed about a 17-percent increase during JFY 1980, and it is expect-
ed that a double-digit level of growth will continue into 1981. It is generally
true that industrial instruments require from half a year to 1 year from receipt
oC order to delivery; comparison with trends for orders of heavy electrical indus-
try items reveals that the peak seems to come about a year later.
The demand for heavy electrical goods is firm and orderly at the present time, and
it is estimated that orders for industrial measuring equipment will total 260-270
billion yen in 1980. Estimating the trend for the coming year on the basis of
past results and the present situation, there are strong indications that produc-
tion of industrial measuring de~~2ces during 1981 may well exceed the figures for
the preceding year by 20 percent.
While there is no direct relationship with market trends, the fact that development
of the international-scale measuring equipment industry in Japan will take place
during 1981 may be one of the major subjects of the year.
Sharp Recovery in Equipment for Heavy Chemical Plants
Let us now consider some changes in demand. What comes sharply into focus first
of all is the sharp recovery in demand for the large type of plants in the heavy
industrial chemical industry, such as steel a:~d petrochemicals, which are the
largest users of industrial measuring equipment and which up to 1979 had been
wallowing about. Where steel is concerned, there has been some "replace" (facil-
- ity renovation) in blast furnace related areas tied in with increased production
in the crude steel base, but all the manufacturers are devoting might and main
to the introduction of continuous casting facilities into their production lines
in order to improve production and conserve energy. As a result, orders are
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increasing for industrial measuring equipment to control the continuous casting
Eacilities.
I:n another direction, the renovation of ethylene plants which appeared in consid-
erable magnitude in the scale of orders was the highlight of 1980. Control sys-
tems using digital equipment appeared during this renovation.
Ever since the first oil shock in 1973, no new petrochemical plants have been con-
structed, and the aging of the present petrochemical plants is a problem of deep
concern. This is why the petrochemical industry considers it necessary to renovate
its facilities, if only to maintain international competitive strength.
In addition, the demand for industrial measuring equipment is increasing without
exception in the machinery and cement industries and in food and other industries.
The private sector demand overall is very active and moving forward, and it is
more difficult to locate distressed areas.
On the other hand, government-related demands, such as for water treatment, re-
flect the fiscal difficulties of the local self-governing bodies and may well see
some difficulty in growth during 1981. At the same time, power rates could not be
raised, as had been planned initially, and this has resulted in a lack of capital
on the part of power companies, with the result that they have had to suppress
their orders. These are factors responsible for the break.
A major movement which may be classed as a most recent highlight is the expansion
in the area of industrial instruments for energy conservation and power conserva-
tion on the part of the ventilation industry. The measuring equipment industry
inay well consider this a very promising future market.
- Uncertainty in Materials for Export of Industrial Measuring Equipment
As a whole, the export situation is orderly, but projects tied in with the infra-
structure (facilities which are the foundation for an urban structure such as rail-
roads and harbors) of the Middle and Far East, which make up a large fraction of
the total volume of this type of instruments, had ~ust about been completed when
the Iran-Iraq war put a stop to exports destined for Iraq. These clearly are
minus factors.
Furthermore, plant exports to China, which had increased greatly since 1979, are
undergoing difficulties, with the result that orders which had already been re-
ceived have been canceled due to the new economic policies of the Chinese Govern-
ment, which is selectively reassessing its plant construction plans and suppressing
new orders.
In particular, three specialty companies--Yokogawa Electric Works, Yamatake-
}toneywell, and Hokushin Electric Works--established service centers in China and
had been eyeing large'orders for industrial equipment, but they are now faced
with the need to readdress their market strategies.
The strong tendency of the yen to increase in value is also adding considerable
uneasiness to future export trends.
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Alon~; the technological front, there is growth in the use of digital control
modes. A model example of the dispersed-type digital control mode is the single
loop controller, in which the number of control points (loops) under a single
c~ntroller is minimized. This type of controller was announced near the close
of 1979 by Fu~i Electric, Tokyo Shibaura Electric, and Mitsubishi Electric. In
1980, two specialty companies, Yokogawa Electric and Hokushin Electric, along with
Hitachi Limited, Meidensha Electric, and Shimazu Seisakusho, also entered the
picture, and a fierce fight for orders is being waged.
Expectations in Area of Optical Fiber Measuring Equipment
The electrical measuring equipment group, which now follows industrial measuring
equipment, may undergo growth during 1981 that may surpass that of industrial
measuring equipment. An item in the list of electrical measuring equipment which
showed outstanding growth during 1980 was the LSI tester. Activity in this item
does not seem to be diminishing in 1981. This is the result of the strong demand
for the testing ~nd researching of semiconductors; Takeda Riken Kogyo, Ando Elec-
tric, and Minato Electronics are leaders in this field.
Oscilloscopes, which have recorded the highest sales among general-use equipment,
had sales which totaled 18 billion yen in 1980. This was an increase of 15 per-
cent (projected) over the preceding year, but the proportion of the entire measur-
ing equipment industry taken up by oscilloscopes is decreasing.
Measuring equipment associated with the use of optical fibers is expected to pro-
vide a new area for measuring equipment. Adachi Electric and Ando Electric have
entered the market with products developed through joint efforts with the Nippon
Telegraph and Telephone Public Corporation. Both of these companies are project-
ing annual sales of 1 billion yen, indicating their high hopes.
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'rable 4. Projected Production of Electronic Measuring Equipment for Industrial Use
(Monetary unit: 1 million yen)
- ~ . _ ~ - 54 ~P~ 55 56 ~1$ 55/54 ~!!E 56/55
. . . . ~`~.,3. (~E#it) ~~~)::.~,_~`fi~l) � 4 (96) ':~:.5~:(%)
~ . a---..
' . ;i, r ,:~r`a~~p~C,,.:.A'~"�'~,'~~e'-~e~~5':y � 6 ~U F,gq '~~i !~I !U~ ~~I
7�~!!'(,f}~!~ 310,740 365.600 430,000 117.7 117.6
H D~:t~t~�s(14'.~13k~t.~-5tdt) 34.908 36~600 38~000 104.8 103.8
g ~~;,~;~pj t~ 121,896 148,500 178,000 121.8 119.9
10 1'~ii~�~i~� ~tii1~1'~k~
_ i (=r1 v5+1~�7/~~~-9td~) 9,202 10,400 11,500 113.0 110.6
1~ U~IYb~~hl~i-*~ib�T~S+) 5,142 5,600 6.000 1U8.9 107.1
1~ CJi~~1co�'}I~JiA~I%i:~34(~i~~ti~~7iltdt) 3.836 4,300 4,700 112.1 109.3
13 i1$1f't~~l%f ~a l~ i[7 ytd 24.655 30.000 36,000 121.7 120.0
la sG f~~f�'~~%i~:�nY~~Ef~~~~l~~#
( LSl ~r :z 9. ~f i t- g~~�~- y td ) 20,169 29,000 40,000 143.8 137.9
15 (z:i~s~1'~�'&:1~iR~I~E$~
~;~~n~~,~ar.~~~s:i~~is~~tat~ s.sas s.soo s,~oo io~.s ioa.s
is t~~;ilPl'u:~�Jt(PCMi~~J~~~al;~~~r~~) a,so, a,soo s,2oo ios.a ios.i
17 ~lu'1�)iABhll~~#(f3~','5~~2�s.L~-5+'tdt) 28,902 34.000 39,000 117.6 114.7
18 t~~i1~~1~';~(i1U1~3's 19,540 24.000 29.000 122.8 120.8
19 D 1:YNt$"s 153,936 180,500 214,000 117.2 118.6
2n ~Ot:CN11:~~1'~'sl'R1R3�a,~(~~tdt) 75,733 f36,000 100,000 113.6 116.3
2 1 ~~4~~_T.X'df~# 57,259 68,000 80,000 118.8 117.6
2~ �T-y~PR,~~ 20.944 26,500 34,000 126.5 128.3
2 3 �i~t~~!!! 878,700 987.200 1.065.700 112.3 108.0
2 4 D*'i ~'itil~f:t$!~ 571,000 622,700 664.100 109.1 106.6
~ 5 ~i,d~51k! 40,200 40,800 40,700 101.5 99.8
z e r~~~E 210.900 220,900 228,000 104.7 103.2
? ge tr j�:c~}~ 112,300 122,300 139,7A0 108.9 113.8
2 ~ rl.~i~ ~{~I~ 81,900 82,900 73.700 101.2 88.9
sg ?u~1t~ 16,700 15,700 15,100 94.0 96.2
2a ;~;~t~,lt1~~ 93,400 106,600 115,100 114.1 108.0
3n ;~,~~i,tr~~~ 73,4pp 85,300 91,700 116.2 107.5
31 ~f i 9 t~ 10,400 11,500 13,000 110.6 113.0
~p ~p~}~,i g,700 9,800 10,400 101.0 106.1
3'~ '~~t~td�~ 79.100 100,400 120,100 126.9 119.6
~~;;:~~~j~~ 3,200 3,700 3,700 115.6 i00.0
3~i 7-v'l l=~J 66,900 87,700 106,900 131.1 121.9
fp~~ 9,000 9,000 9,500 100.0 105.6
~ 7 148,500 154,000 160,200 103.7 104.0 �
? H ~{if~is~ 3~ 27.100 36,000 44,000 132.8 1'12.2
t~;~~t&?~I~J~~�~ 72,600 66.000 58,000 90.9 87.9
4n ~i'r~ilil~t~'ilk~~~ 27.500 31,000 34,700 112.7 111.9
41 t~i1L~ 21,300 21,000 23,500 98.6 111.9
~2 D~,~(~(ji,~~~ 307,700 364.500 401,G00 118.5 110.'l
, q~ ~;t~~ ~ 38,60p 43,G00 48,000 113.0 110.1
4,~ ~i-~y,~~}~$~ 3,600 3,600 4,000 100.0 111.1
,~r, Y li l-: v 9 i 1i'1i,~1~E~�s 3~.000 40,000 44,000 114.3 110.0
i 4 F p~~;~g{�~ 7i 173,300 205,400 227,100 118.5 110.6
! 4'l ftd%~luyit0l;i$~zii'i 103,900 124,000 137,000 118.2 110.5
4 A 441b ~~~5 idl l�' I~c ~ 6l3,400 81,400 90,100 119.0 110.7
,1 q ~,~t~,ry) y~ g5,800 115,500 126,500 120.6 109.5
5~ v~~~ S 29~8(10 3~3.500 38~000 115.8 110.1
51 1'v. i8 ~A95t'l~c i~' 17,900 18,000 19,500 100.6 108.3
52 z~lU! 4k3.100 63,000. 69,000 131.0 109.5
53 ii.) ;~it~~~2,:;n)i~'t. HE;e. -Finq,2;u~i~tMtt~_T.~tz'~~fi~SlilLf~~1~E~s)~H-1~'~L�fll~.~&1:~~1:(~~1l;dibll~E3a)
~~~~a~~f~~,=.~.%. ii~~~~G1,;faEas,_ia~fi~~if,31~2,:n1~l;~;t~~-~k~tF~~
[Key on following page]
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Key:
1. JI'Y 1979 (actual record) 20. Process use industrial equipment
2. JFY 1980 (estimated) ~such as transmitters, receivers)
3. JFY 1981 (projected) 21. Other industrial equipment
4. JFY 19~0/1979 22. Data processing facility
5. JFY 1981/1980 23. Communications equipment
6. Monetary value 24. Telephone and telegraph equipment
7. Electricity measuring 25. Telephones
instruments 26. Exchanges
8. Electricity measuring devices 26a. Electronic exchanges
(such as power meters, meters) 27. Cross bar exchanges
9. Electrical measuring devices 28. Other
10. Voltage, current, power measuring 29. Applied telephone equipment
- ~ devices (such as digital mul- 30. Telephone accessories
timeters) 31. Interphones
11. Circuit meters (circuit tester) 32. Other
12. Frequency-time measuring devices 33. Telegraph equipment
(such as frequency counters) 34. Home telegraph devices
13. Waveform measuring devices (such 35. Eacsimiles
as oscilloscopes) 36. Other
14. Electron Cuhes, semiconductors, 37. Conveyer devices
circuit element measuring de- 38. Signal transmission devices
vices (such as LSI testers, 39. Broadband termi.nal pole devices
impedance meters) 40. Carrier telegraph terminal de-
15. Transmission characteristics, vices
radiowave testing devices 41. Other
(selective level meters, elec- 42. Radio communication equipment
tric field intensity measuring 43. Broadcast devices
devices) 44. Radio transmitters
16. Comprehensive measurement facil- 45. TV transmitters
ity (PCM error rate measurement 46. Radio communication equipment
device) 47. Fixed station communication
17. Auxiliary measurement devices devices
(such as signal generators, 48. Movable station communication
recorders) devices
18. Other electrical measuring 49. Applied radio equipment
equipment 50. Radar equipment
19. Industrial instruments 51. Radio direction finders
52. Other
53. The data on actual, estimated, and predicted values for coimmunications
equipment were from the surveys conducted by the Communications Equip-
ment Industrial Association (telephone and telegraph equipment) and the
Japan Electronic Equipment Industrial Association (radio communication
equipment)
COPYRIGHT: Nikkei-McGraw-Hill, Inc., 1981
2267
CSO: 8129/1021-D
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Communications Equipment
Tokyo NIKKEI ELECTRONICS in Japanese 13 Apr 81 pp 271-273
[Article by Hisashi Arai of NIKKEI ELECTRONICS]
[Text] Anticipate Reaching 1 Trillion Yen Through Stable 8-Percent Growth Rate;
Rapid Growth in Optical Fiber Communications
Communications equipment growth is completely stabilized. It is estimated that
sales of telephone and telegraph equipment (Communications Instrument Industrial
Association) and of radio com~unications equipment (Japan Electronic Equipment
Industrial Association.) together will total 987.2 billion yen--a 12.3-percent in-
crease over the previous year. At the same time, the 1 trillion yen mark is ex-
pected to be attained in 1981, and an 8-percent rate of increase--65.7 billion
yen--is expected to be realized. FLrthermore, an average annual rate of growth
of 9.1 percent is anticipated through the next 4 years ending in 1984. This indus-
try may be said to be in a stage of stable growth.
On r_he other hand, the total procurement value for the Nippon Telegraph and Tele-
phone Public Corporation, which accounts for close to half of the domestic com-
munication equipment market, has registered the low rate of growth of 3-4 percent
over the past 2-3 years. This has been the result of a decrease in the number of
new telephones being installed. There was a time when more than 3 million new
telephones were installed every year, but this number dropped to 1.35 million in
1980. At the same time, developments in the data communication and facsimile
transmission area are nowhere close to the telephone demand. Consequently, this
period of low growth for the Nippon Telegraph and Telephone Public Corporation is
expected to continue for a while.
Furthermore, there is the problem of developing sources for procurement of mate-
- rials with respect to the Nippon Telegraph and Telephone Public Corporation.. This
is a problem on which there was a provisional consensus betwl83-185)n aThereeare
United States (see this journal of 2 March 1981, No 259, pp
still many unclear points as to just how this situation will affect Japanese com-
munication equipment manufacturers. For the time being, the effect is expected
tu be small in 1981, at least; it is certain there will be fierce competition for
tlie business of the Nippon Telegraph and Telephone Public Corporation with its low
rate of growth.
Despite this situation, the growth rate for communications equipment in 1980 ex-
ceeded the predicted value and attained a double-digit rate of growth, and it is
expected to increase by another 8 percent in 1981. This is the result of an ex-
pansion of domestic private industry demand and external demand. Without excep-
tion, manufacturers are looking toward "disengagement from the public corporation."
For example, ma.ny companies now are venturing into the information treatment and
facsimile markets. While it may be said that the rate of growth in facsimiles is
hl.gh, about 20 companies are crowding into this field.
"Limiting ourselves to the communications equipment market for 1981, this will be
another year when the trend will not be clear," said Shingei Urakawa, director of
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~he Communications Industry of Fu~itsu. The reason for this is that there has
been little increase in the budgets of the different government ministries and
agencies, and particularly of the local self-governing bodies. The manufacturers
have recently developed, through the medium of communications technology, disaster
handling systems, public information systems, dam control systems, traffic con-
trol systems, and building control systems. On the other ha.nd, sales of these
control systems are highly dependent on increased budgets for the 1oca1 self-
_ governing bodies. In the midst of this situation, about the only items which
show a potential for increased sales this year are electronic exchanges and fac-
similes. Although no clearcut classification has been assigned as yet, optical
fiber communication has finally become a co~ercial item.
Electronic Exchanges Increase by 13.8 Percent; Facsimiles Exceed 100 Million Yen
Electronic exchanges are expected to exceed the previous year's record by 13.8
percent and reach sales of 139.2 billion yen. Since the increase in all exchanges
l~as slowed to 3.2 percent as a result of the decreasing number of new telephone
subscribers, this is an indication of the sharp drop in crossbar exchanges. Cross-
bar exchanges were just edged out by electronic exchanges in 1979; 1981 sales will
probably be about 73.7 billion yen, or about tialf of 1979. Already, nearly all
new installations are electronic exchanges, but a crossbar can be installed at less
cost.where there previously was a crossbar.
At the same time, a shift is presently underway in the area of electronic exchanges,
from a space-divided type of exchange that uses mechanical switches to a time-
divided type of exchange that uses electronic switches. These are called digital
exchanges. The entire network and the transmission pathways are going the way of
digitalization. It has already reached the point where digital exchanges are a
must if one is to survive in the fight for orders from developing nations.
Fujitsu Director Shingei Urakawa said, "In one sense, there seems to be a shadow
on the growth rate of facsimiles." Facsimiles have shown about a 30-percent rate
- of growth over the past few years. This rate is expected to be 21.9 percent in
1981, for total sales of 106.9 billion yen, and there are prospects that the ~rate
of growth is settling down. "Be that as it may, breaking the 100 billion yen mark
was forever in our minds in the past, and we have achieved one of our nodal points"
(Director Tadashi Kojima of the Plans Department, Matsushita Denso Kiki). Follow-
ing circuit development by the Nippon Telegraph and Telephone Public.Corporation,
the 100 billion yen mark was attained in short order.
There is still a continuing effort to lower the cost of facsimiles. The G III
unit (1 minute), which formerly cost about 3.5 million yen, now costs less than
2 million yen and is pointing in the direction of 1 million yen. Among the dif-
- ferent types, G II (3 minutes) and G III (joint use unit) are showing sharp in-
creases. The G II units of the past have now come to be used together with the
G I(6 min,:tes). There is very little production of the G I alone.
The Nippon Telegraph and Telephone Public Corporation's minifax is about to ini-
tiate service at any time. Its appearance does not seem likely to cause great
turbulence in the market, as in the past. There is likelitwod that a new-based
market is developing.
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Uptical Fibers Will Be in a"Doubling Game" for a Whi.le
"lt can be said that 1980 was the year in which optical fiber communications took
of.t from the research and development stage to the co~ercial stage. At the
present time, this product is in an annual doubling game as its market expands"
- (Hajime Mizuguchi, manager and director of Optical Cable Communications Develop-
ment Headquarters of Nippon Electric). The scale of all the domestic manufacturers
is not clear, but sales by Nippon Electric were roughly 2.5 billion yen in 1979 and
10 billion yen in 1980, and they are expected to reach 15 billion yen in 1981. The
large growth during 1980 was the result of an order for m.ore than 7,000 lan of fiber
core for a project in Argentina.
In rebruary 1981 the Furukawa Electric Industry and the Fu~itsu group received an
order for fiber core cable totaling about 4,000 km for a pro3ect in Hong Kong.
There are trade talks for 1981 on optical fiber communications with North America,
the Near and Middle East, and Southeast Asia. The increase in foreign orders is
very large at the present time.
On the domestic scene, the Nippon Telegraph and Telephone Public Corporation has
announced a plan to co~nercialize optical fiber communications. This pro~ect will
link the telephone centrals of Otemachi and Aoyama, a distance of 8 km, and 12 cen-
trals deployed over the country for a total distance of about 110 km. Construction
will begin this August. The number of cores in an optical fiber cable varies from
12, 18, 24, 36, 42, and 48 cores, and the information transmission speed is 32 M
or lU0 M bi.t/sec.
At the same time, the public corporation will conduct on-site experiments in large
volume communications between its Musashino Electrical Communications Laboratory
and its No 4 Electrical Communications Laboratory (provisional name), which is
presently under construction at Atsugi city in Kanagawa Prefecture, over a dis-
tance of 80 km. This on-site experiment, which will use the single mode fiber,
is a forerunner in the world; its information transmission speed will be 400 M
bit/sec and its relay interval 20 km.
The optical fiber mode has already made possible lower costs in nearly all trans-
mission pathways, compared to past modes to parties other than subscribers. This
is why the public corporation plans to use its 1981 business as the foothold for
sharp increases in the number of construction [undertakings] for 1982. External
demands will make up the greater part of the business for 1981, but demands by
the Nippon Telegraph and Telephone Public Corporation may well take over the
larger share starting in 1982. ,
CUPYRIGHT: Nikkei-McGraw-Hill, Inc., 1981
2267
CSO: 8129/1021-E
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Electronic Parts Indus~ry
'1'okyo NIKKEI ELECTRONICS in Japanese 13 Apr 81 pp 274-278
- [Article by Shimei Matsuoka of NIHON KEIZAI SHIMBUN]
[~xcerpts] The electronic parts industry has been dubbPd with the worthy but not
very frequently heard expression "an indust~y with a favorable structure." Look-
_ ing at the statistics for 1980, any industry whose sales exceeded the previous
year's sales by 20 percent is not that outstanding. "This is not a boom; this is
a scale-up" (President Katsutaro Kataoka of the Alps Electric Company), and the
overall picture is one of a clearly upward trend. The heads of this industry are
confident that this growth will continue in an orderly manner through 1981. For
example, Matsushita Electronic Parts, whose sales [last year] of 200 billion yen
exceeded 1979 sales by 40 percent, expects to see sales "increase by 35 percent"
in 1981 (Taro Kuninobu, president of Matsushita Electronic Par~s Co). Alps Elec-
tric also recorded a 35-percent gain in 1980 and expects to increase by 20 percent
in 1981 to a total sales figure of 170 billion yen. The strong position of these
companies is evident.
The electronification of machinery, or the so-called mechatronics, refers to the
merging of electricity and machines. It is the electronics parts industry, cen-
tered on the microcomputer, which has supported this trend. The electronic parts
industry has advanced not only into the mechatronics market but also into the watch,
office machinery, automated vending machinery, automobile, camera, electronic
musical instrument, and toy business areas as well.
Looking at electronics and electrical appliances from the past, household appliances
include the VTR, which has really come into its own, the video disk which will ap-
pear this summer, and the soon-to-appear digital audio disk (DAD)--a succession of
"new hotshot items" that are emerging. It is vital that this increase in demand
for electronic parts continue for a while. There are some who say that "this is
the peak period." Furthermore, foreign set manufacturers' evaluation of Japanese
electronic parts is rising, from the standpoint of both quality and low cost, and
_ Japan's position as the world's electronic parts supply base is being reinforced.
On the other hand, this continual expansion in the activity stage is not always
- a bed of roses where the individual parts manufacturer is concerned. Any expansion
- of this stage requires just that much more technological strength, and the industry
is being tested over a wide area with regard to manpower, planning strength, and
financial strength. Even though the industry's overall situation is good, there
are wide differences among individual companies. These trends were evident in the
statistics for 1980. In this respect, 1981 may be considered the start of a truly
selective weeding-out period.
The electronic parts industry probably will go more and more into block formation
and systematization from here on. There are already a number of systematized
' parts, such as electronic tuner systems and set mechanisms and printers. Many of
these use custom (specia.l order) LSI. This is why it is becoming necessary for
parts manufacturers who are users of these custom LSI products not only to design
but even to go as ~ar as mask design.
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, I ll(k) 1l~~8'ft (52 ~~J01=100) ~
I 10(N) .
~b
d00 o0U
~ 7f1~ ~ T R
~ Bql 2 J50 I
500 ~
~ ~ ~ ~
' ~ 3 ~0 y4 Lfib~ul I
~61Jtll~ '~:1�~~~~ ~
s~~ ~ ~ rF 3�� ?
y ~G. f�Jt,Mii .I~fhh(!. 18 I
':5U ~ i L':t- 4. I 250 t'f~)pk'~b! ~ I
?~~fclR i ' ~ 7
i ~
~ i/ 6 2~ ~ ~
' '#~6 1 B I
- 1~ 150 ~ zm,~ :
ll)0 /'r 100 I
~T~/t �~~L%i9 � I f7CF~~1 ~
' lp, CB F7' ~p ~L1~'~R7~r20 I
� . . . . ~
11 IG~ 21CI1 ]%A 1~I[L lAi 2 1~ 11~ 1 alA A911 O aA lq JN %A !q 1tA 1GI ~11 iw ~
2752~ 2253~2354~Zq55~2856~ 2152#~22 53~2.3 54~ 29a5a25i6~'� ~
rigure 3. Rate of Growth by Markets of General Electronic Parts Industry (Exclud-
ing Magnetic Tapes) as Compiled by Electronic Machine Industry Associa-
tion Questionnaire. The VTR-Related Industry, Which Showed Large Rate
of Growth, Accounted for 19.1 Percent and Audio Use Parts for 26.5
Percent During the Same Period
Key:
1. Total electronic parts 13. Compilation of other industries
(first half of 1977 = 100) 14. Watches
2. Electronic and electrical 15. Electric parts for automobiles
parts export area 16. Office equipment; automated sales
3. Communication and electronic machines
measuring equipment 17. Cameras
4. Computers, terminals 18. Other
5. Exports 19. Toys .
6. Household electrical goods 20. Electronic musical instruments
7. Audio 21. 1977
S. Television sets 22. 1978
9. ~lectronic ranges 23. 1979
10. CB transceivers 24. 1980
11. F'irst half 25. 19�31
12. Latter half
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i
- Table 5(a). Projected Production of Electronic Parts (1)
(Volume aumber: 1,000 units. M~onetary unit: 1 million pen)
. 1 G~~F?~(~M)~. _2sSf?~( ? 36Bfi~(fi!M) as5/Sk~FS(9b) a56/S~?~(96)
6~~ e~ e*! ~i~ e#kt 7aw e ldcf ~$iA ,
Rey:
1. JFY 1979 (actual racord) 5. JFY 1981/198U (x)
~ 2. JFY 1980 (partly eatimated) 6. Number
~ 3. JFY 1981 (predicted) 7. Monetary value
4. JFY 1980/1979
~ ~ 1 257,290 - 297~450 - 329.500 - 115.6 - 110.8
D l-~ ~t F' 2 . 4,841.740 34.858 6,78~,000 44,Z50 7,886.000 49,900 140.1 126.9 116.2 1128
='7 A� 5~-f x- b' 3 115.926, 3,918 844,000 4.250 888.000 5.300 117.9 108.5 105.0 101.2
' J~ i�~-f :~f- F' 4 4,125.814 30,910 5.910,000 40,000 7,000,000 ~15,600 144.0 129.3 117.8 114.0
fiC~ i100 mA 1:1~i g 1.987,506 50,535 2,270.500 53,100 2,496.000 53,300 I15.y 105.1 109.9 104.1
:~17 igi~#~' 8 1.948.700 J6.i06 2.250.000 50.000 2,415.000 ~2,500 . 115.6 107.1 110A 105.0
'F~~ Z0.806 3.8~9 20,300 3,100 21,000 2,800 98.5 81.0 102J 90.3
D F 3 i ii t 9 g i,442.892 101,3~7 5,83S,S00 114.500 6,694.700 122,700 131.3 123.0 114.1 107.2
7='7 � F'} i'i ~ 9~ g 10T,945 3.411 9Q000 2,800 212, i
00 2.300 86.2~ 82.1 88.9 821
:~l ~ i� F~S'. :~9 lp S,Z08.766 93,~ 5,$70.000 108.000 6,400.000 11y.000 1323 113.7 113.9 107.5
g 1 1 126.181 4,i'23 1T2,500 5,700 212,000 6,400 136.7 120.i 1129 1123
D!*- 9 12 1Q7.135 4,131 � 125,000 5,000 137,500 5,400 116.7 121.Q 110.0 108A
' D~ C~1 ~ 9 13 361.048 4.456 325.000 4.000 325.000 4.000 90.0 89.8 100.0 100.0
~ q 14 106,374 19,436 140,000 22.000 161.000 24,500 1329 113.2 1~~5.0 111.4
D+~l~~!l~t~ lg 1.~79.420 35,953 1.a60.000 4T.200 - 1,992,000 ~9.i00 135.3 131.3 I36.~1.. 1'16.~
~'S~~It9'~ X- b' ' 16 592 25.497 1,350.OOU 34.~ 1.850.000 44.000 135.1 133.3 137A ~'~.~1J.4
~ ~~1f~ 1 ~ ~.828 10,456 110.000 13.200 142.000 15,700 137.SE~ 126.2 129.1 P1~9
I : ~Z~~~*+~~~~' 18 6564 7 ;~9SL;
~~QBi 1 g - 418.379 - 601.000 - ?68.900 1d3.6 - L.'7.9
D~aRtk~1A~43 20 1.873.46~5 375.701 2.694.000 54b.000 3,600.000 700.000 143.8 1~t5.1 133.6 128.4
~7-o y IC 21 918.307 101,180 1,?T~,000 140,000 1,600.000 180,000 133.3 138.d 130.7 129.ti
T r: 9 1L IC 2 2 955,158 274,521 1,370,000 405,000 2,000,000 520.000 153.9 147.5 136.1 128.4
I i