Future Business Development in the Transition Period of ...

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Future Business Development in the Transition Period of Energy Resources August 18, 2021 (Security code: 6376) NIKKISO CO., LTD.

Transcript of Future Business Development in the Transition Period of ...

Future Business Development in the Transition Period of Energy

Resources

August 18, 2021

(Security code: 6376)

NIKKISO CO., LTD.

Copyright © 2021 NIKKISO CO., LTD. All rights reserved.

Business characteristics

2

Industrial gas

Petrochemical

Pharmaceuticals, semiconductors, etc.

(Hi-tech)

Ene

rgy

Oil & gas

Nuclear/thermal power

generation

Low carbon (LNG/LPG)

Decarbonization

Major initiatives and measures

• As the demand for oxygen for hospitals and raw material gas for semiconductors is firm despite the COVID-19 pandemic, we will promote low-cost production at our factory in India, and strengthen market development in developing countries

• Establishment of production and sales systems in response to supply chain changes in China and the Middle East

• Establishment of order-receiving and production systems for mass construction of the floating production, storage and offloading systems (FPSO)

• Construction of a slim business structure for precision equipment to match the scale of business after the Great East Japan Earthquake

• Development of new applications such as biopharmaceuticals and 5G based on experience gained in petrochemicals and multilayer ceramic capacitors, etc.

• Markets are linked with GDP growth

• Long-term steady growth is expected

• Local production for local consumption

• Markets grow or shrink heavily depending on change in supply and demand by region and industry in the global supply chain

• Heavy reliance on large investments in advanced technologies

We are managing a portfolio balanced against economic fluctuations and transition in the industrial structure

Sales volume (billion yen)

16(18%)

32(35%)

5(6%)

5(6%)

4(4%)

27(30%)

1(1%)

• Integrated operation of CE&IG by making NCI a subsidiary

• Introduction of LNG/LPG test facilities for cryogenic pumps at the Miyazaki Factory

• Start and acceleration of development of products for hydrogen and ammonia in Japan, the United States, and Europe

• Market formation changing dynamically over the medium to long term due to a variety of factors, including ones previously considered non-economic, particularly short-term energy supply-demand relationships and energy policies in each country

- Availability of primary energy and energy mix in each country

- Geopolitics, low- and de-carbonization, and reduction of environmental impact

• Supply of infrastructure equipment faces competition in the globalized supply chain

Total: approx. 90 billion yen

Business Portfolio

Copyright © 2021 NIKKISO CO., LTD. All rights reserved.

10 20 30-50 100-150200250

350400

450

805 865950

1,200

0

500

1,000

1,500

FY2020

(実績)

FY2021

(予想)

FY2022

(中計)

FY2025

(中計)

FY2030

脱炭素化 低炭素化(LNG/LPG) その他

The following and subsequent pages explain energy conversion, which is changing significantly around the world

Low- and de-carbonizationenergy business

3

Trend in sales of Industrial Business

(billion yen)

Toward the Medium-Term Business Plan “Nikkiso 2025” and 2030

Decarbonization Low carbonization (LNG/LPG) Other

FY2020

(Actual record)

FY2021

(Forecast)

FY2022

(Mid-term plan)

FY2025

(Mid-term plan)FY2030

50

100

150

20

86.595.0

120.0

80.5

2535

40

45

10-153-521

Copyright © 2021 NIKKISO CO., LTD. All rights reserved. 4

1. History of Nikkiso’s flexible response to several energy shifts, recognizing them as business opportunities

• Coal → Oil → Nuclear power → LNG

2. Acceleration of existing initiatives

• Making sure to capture demand by enhancing our manufacturing capacity of products for LNG/LPG as transient energy toward decarbonization

3. Response to new changes

• Involvement in advanced projects in the 2020s for full-scale deployment of decarbonized energy between 2030 and 2050

˗ “Green” Energy – Hydrogen and hydrogen carriers

˗ “Blue” Energy – CCS/CCUSDNV GL ENERGY TRANSITION OUTLOOK 2020

Decreasing expenditure on fossil fuels

Increase and shift in expenditure on non-fossil fuels

Nikkiso’s policy on response to energy conversion

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1. Further expansion of LNG/LPG supply chain globalization

• Exporters: Russia (Arctic 2), Qatar

• Importers: China, India, Southeast Asia

• Consumption: Expansion of the range of small scale applications as importing regions expand geographically

2. New applications as alternative energy

• LNG-/LPG-powered ships: Orders received for fuel filling systems worth approx. 8 billion yen in 1H FY2021

◆ Enhancement of manufacturing capacity to meet growing demand, and promotion of localization of sales and manufacturing• 2021: Assembly of pumps and operation of LNG/LPG test facilities in Miyazaki

• 2021: Consolidation and enhancement of CE&IG sites in Malaysia

• 2022 plan: Assembly of fuel gas supply systems for LNG-powered ships and operation of liquid nitrogen test facilities in South Korea

• In other areas, we will continuously consider approaches that efficiently utilize resources of Industrial Business companies

DNV GL ENERGY TRANSITION OUTLOOK 2020

Investment level until 2020

Capturing demand through our capacity enhancement

Business opportunities to capture

Our approach

Business Opportunities in Low-Carbonized Energy (LNG/LPG)

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Production Consumption

Experience and technology developed in petrochemical and LNG/LPG can be applied to Green and Blue energy businesses

Transportation

By-product hydrogen

(Chemical factories, etc.)

CO2(CCS/CCUS)

Fossil fuel reforming

Renewable energy electrolysis/biomass

Solar Wind power Biomass

Petroleum(Refineries)

LNG(Terminals)

Coal(Australian brown coal)

Liquefied hydrogen

LH2

Liquid ammonia

LNH3

Organic hydride

CH3

Use as electricity

Ammonia/hydrogen power generation

(Mixed combustion)

Fuel cell distributed power supply

Hydrogen stations Hydrogen- and ammonia-powered ships

Use as fuel

MCH

Toluene Methylcyclohexane

Nikkiso’s Approach to Decarbonization

Copyright © 2021 NIKKISO CO., LTD. All rights reserved. 7

H2 Liquefaction Plant

Plant Storage

H2 pipelineor Natural Gas Pipeline

Virtual Pipeline / Power Generation

Bunkering Facility

GH2

Filling Station

Tender Filling

H2 PoweredCars, Forklift,

Buses, Trucks, and Mining

Vehicles

H2 PoweredShips

H2 / H2mixed Firing,

Fuel Cell Power Production

H2 Powered

Railroads

Filling and Consumption

LH2

Hydrogen Production Liquid Hydrogen Processing and Transportation

LH2

LH2

LH2

LH2

Ship-to-ship Transfer

FSRU

LH2 Trucking

LH2

LH2 Trading/Export

Terminal

LH2 LH2

GH2

LH2 ReceivingTerminal

LH2 LH2

LH2

LH2/GH2

LH2 Shipping

LH2 LH2 LH2

LH2 Truck Loading System

H2 pipelineor Natural Gas Pipeline

LH2

Heat Exchanger Systems Cryogenic Pumps

Reciprocating Pump

Centrifugal Pump

Cryogenic Service

Service is provided for all products.

Process Systems

Turboexpander

Integrated Cryogenic Solutions

We provide turnkey solutions for the entire Value Chain.

VaporizerLiquefier

Industrial Feedstock

Heat Generation

GH2

Fossil Fuel

+ -Electolysis

Gasfication/Reforming

hydrocarbon

GH2

GH2

Water

Water

GH2

GH2

GH2

GH2

GH2

Biomass

Airplane Filling

LH2

LH2

Rocket Filling

H2 Powered Airplanes

Rockets

Oxygen Liquefaction Plants Plant

Storage

LOX Trucking

LOX

LOX

O2

LOX Truck Loading System

O2

GH2

Covering a wide range of our products from upstream to downstream in the hydrogen value chain as well as oil, gas, and LNG

Hydrogen Value Chain and Our Product Lines

Copyright © 2021 NIKKISO CO., LTD. All rights reserved.

1. Expansion of liquid hydrogen station business in California, U.S.• Stations for forklifts, which are already in the spreading phase

• Full-scale operation of stations for passenger cars from 2020

• Bus stations, which started to be launched in 2021

• Truck stations, whose demonstration has started for commercialization in or after 2023

2. Expansion to various applications including liquid hydrogen import supply chains and power generation in Japan• Participation in many advanced demonstration projects targeted around 2025

3. Hydrogen exports from the Middle East, Australia, and Southeast Asia• Participation in advanced projects utilizing approaches linked to imports above

8

The product and market development efforts to date have taken shape. We have already received inquiries from many customers as leads, and started receiving more orders from this term

Business opportunities to capture

Our approach

◆ Taking advantage of technology and experience in hydrogen as industrial gas and LNG/LPG

• Liquid hydrogen stations

- Utilizing GP Strategy Alternative Fuel Division acquired in 2020 to supply a set of equipment required for stations as EPC

- Deepened collaboration with hydrogen suppliers and station operators

• Advanced projects

- Promotion of the development of capacity enlargement through the tripolar system of Japan, the United States and Europe in response to increasing demand based on products for and experience in hydrogen as industrial gas

Consumption

Transportation Consumption

Production Transportation

Business Opportunities in Decarbonized Energy: (1) Liquid Hydrogen

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Inquiries have increased rapidly this year, based on experience and technology of LPG and ammonia as an industrial raw material

Ammonia plants Ammonia transport

Power plants

Ammonia-receiving terminals

Hydrogen separation facilities

To the hydrogen market

Ammonia-powered shipsAmmonia-filling facilities

Production ConsumptionTransportation

Business opportunities to capture

Our approach

1. Exports from the Middle East, Australia, and Southeast Asia

2. Expansion to various applications including ammonia import supply chains and power generation in Japan

3. Introduction of new ammonia-powered ships, conversion from or combined use of LPG- or LPG-powered ships

◆ Development of submerged pumps for prestressed concrete tanks (PC tanks) in demand due to enlargement of receiving terminals• Competitive advantage gained by having both canned motor technology and cryogenic submerged pump

technology

◆ Taking advantage of experience in LPG-powered ships

Production Transportation

Transportation Consumption

Consumption

Business Opportunities in Decarbonized Energy: (2) Ammonia

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Pumps for discharging and feeding liquid from a tankCanned motor pumps

• Experience of 26 units: 7 ships in Japan, 15 ships overseas, and 4 units for ground testing

• Possible to use in ships powered by ammonia with similar liquid properties or ships powered by both ammonia and LPG

Boosting pumps for feeding liquid to engineLEWA reciprocating pumps

Cases of LPG-Powered Ships

Copyright © 2021 NIKKISO CO., LTD. All rights reserved.

Example: CCS by the amine adsorption method

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Snøhvit Project on the Melkoya island in Norway

• Multiphase flow transportation using LEWA diaphragm pumps through a 140 km undersea pipeline on the seabed at a depth of 250 to 345 m

Case: Seabed transportation of CO2

Selection of canned motor pumps necessary for the amine adsorption process and optimization for the process are under consideration

Cases of absorption of CO2 using amine absorbent and recovery as high-concentration CO2 have been developed globally by coal-fired power generators, etc.

• Mitsubishi Heavy Industries: Delivered a total of 14 recovery plants in Europe, the United States, Southeast Asia, India, etc.

• Toshiba

• CESAR (CO2 Enhanced Separation and Recovery, EU Project), etc.

Business Opportunities in Decarbonized Energy: (3) CCS/CCUS

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1. The collaborative development system utilizing technologies the Industrial Business has globally

˗ Adoption of Higashimurayama Plant as Engineering Center

˗ Cooperation and clarification of roles within the Nikkiso/LEWA/CE&IG Group

˗ Complementary relationships through alliances with other companies

2. Geographic expansion by effectively utilizing the manufacturing capacity the Industrial Business has globally

˗ Manufacturing and large testing facilities in Miyazaki to cover global markets

˗ Development and enhancement of regional bases

3. Global and regional sales systems mutually utilizing the customer bases the Industrial Business companies have globally

˗ Nikkiso has strengths in Japan

˗ LEWA/Geveke have strengths in Europe

˗ CE&IG has strengths in North America

˗ Mutually utilize bases in Asia and other regions

Business Structure and Challenges for Next-Generation Energy

Copyright © 2021 NIKKISO CO., LTD. All rights reserved.

10 20 30-50 100-150200250

350400

450

805 865 950

1,200

0

500

1,000

1,500

FY2020

(実績)

FY2021

(予想)

FY2022

(中計)

FY2025

(中計)

FY2030

脱炭素化 低炭素化(LNG/LPG) その他

• Steady progress toward the midpoint (2022) of the Medium-Term Business Plan, mainly due to the expansion of the LNG-powered ship business

• Aim to achieve Phase 2 of the Medium-Term Business Plan (2025), focusing on the expansion of low- and de-carbonization businesses

• Expand the low- and de-carbonization businesses to over 50 billion yen

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Low- and de-carbonizationenergy business

Trend in sales of Industrial Business

(billion yen)

Toward the Medium-Term Business Plan “Nikkiso 2025” and 2030

Decarbonization Low carbonization (LNG/LPG) Other

FY2020

(Actual record)

FY2021

(Forecast)

FY2022

(Mid-term plan)

FY2025

(Mid-term plan)FY2030

50

100

150

86.595.0

120.0

80.5

2025

3540

45

10-153-521