The government-run Japan National Oil Corp. said Friday it and five companies will start operating this month a gas-to-liquids pilot plant in Tomakomai, Hokkaido.

JNOC, Cosmo Oil Co., Nippon Steel Corp., Japan Petroleum Exploration Co., Chiyoda Corp. and Inpex Corp. hope the project will prove the feasibility of GTL technology jointly developed by the six-party consortium, JNOC said.

The total cost of the pilot project, including joint research begun in fiscal 2001 and the plant's construction, is expected to be around 4 billion yen through fiscal 2003. JNOC will shoulder 75 percent of the cost.

Inpex will cover 1 percent and the other four firms 6 percent each.

The pilot plant is capable of producing up to 1.1 kiloliters of liquid fuel per day, JNOC said.

GTL technology converts natural gas into petroleum products free of sulfur and nitrogen oxide, such as diesel fuels and kerosene.

The environmentally friendly technology is expected to contribute to commercial development of stranded and small gas fields that have been untapped due to high transportation and development costs.

JNOC said Indonesia, which has many small and midsize gas fields with high carbon dioxide content, has shown strong interest in the technology because it utilizes carbon dioxide in creating products from natural gas.

JNOC and Pertamina, an Indonesian state-run firm, are conducting a joint feasibility study until March on the applicability of GTL technology to gas field development in Indonesia, JNOC said.

Nippon Oil electricity

Nippon Oil Corp. is preparing to sell electricity at competitive prices to national government offices starting next year, as it has surplus power generated by its oil refineries, company sources said Friday.

Japan's biggest oil distributor will bid for supply contracts to be offered by the Ministry of Economy, Trade and Industry and other ministries, the sources said.

Nippon Oil will register with METI as a power producer and supplier later this year to enter the power-retailing market. It will have its power supply system ready by next summer.

A successful bid would make Nippon Oil the second supplier, after Diamond Power Corp., to win a government contract.

Nippon Oil will initially sell 100,000 kw of electricity generated at its oil refineries, as well as at petrochemical plants owned by its group firms.

Nippon Oil plans to increase its sellable power supply capacity to 1 million kw in the future. As part of the project, the company is building a thermal power plant in Kawasaki jointly with Tokyo Gas Co. The plant is scheduled to begin operating in 2008.

In addition to government offices, Nippon Oil hopes to sell electricity to Nippon Telegraph and Telephone Corp. and other telecommunications operators whose use of power is stable throughout the day.