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Brazil’s purchase of local oil company ‘good for Okinawa’

Date Posted: 2007-11-13

Southwest Oil Company based in Nishihara Town is being sold to Brazil’s national oil company, and Okinawa officials are ecstatic about the economic prospects to come.
PETROBRAS is buying Southwest Oil Company, an affiliate of Tonen-General Oil and American Exxon Mobil, for ¥5.5 billion. The announcement by Southwest and PETROBRAS, that the transition will take place next March, is viewed by both the Brazilian company and Okinawa Prefecture as good for the local economy.
Okinawa Governor Hirokazu Nakaima says “It will be good, if we think about the total way for Okinawa. It will bring up tax revenues a lot in Nishihara Town, and to the prefecture as well.” The key to PETROBRAS operations in Okinawa will be the move toward bio fuels, which officials say will become a critical part of the investment.
A PETROBRAS official says “this Southwest Oil Company is in a very good location for marketing to Asian countries, because we’re going to make bio-fuels in the Asian market.” He says the Okinawa company is in a good place for popularizing and promoting the new business. PETROBRAS plans to market to China and southeast Asian countries, and mainland Japan.
PETROBRAS plans to make Southwest Oil Company’s facilities the hub terminal for all Asian oil trade. Okinawa’s Miyakojima and Ie Island have been trying to make bio-ethanol fuels from sugar cane, and Prefecture officials are working with the two islands on production techniques and machinery, while studying how to make it a successful business endeavor.
Masahiro Arakaki, Nishihara Town’s mayor, thinks there’ll be a financial windfall for his town. “The Brazilian oil company is planning to invest ¥100 billion,” he says, “and that makes it the largest project to ever come to our town.” The Prefecture Economic Section Director says “if tankers come to Okinawa often, and become busy, “taxes will rise to the Prefecture and the investment for facilities will come.” Both Nishihara Town and the Prefecture are predicting the PETROBRAS deal will promote manufacturing business companies’ investment in Okinawa.
PETROBRAS says it will transform the Southwest Oil Company by building a new, modern fuel refinery. Currently, 60% of Okinawa’s oil expenditures come from Southwest Oil Company. Still, Southwest was unable to make a profit, noting that it finished 2006 with a ¥381 million deficit, leading stockholder Tonen General to look for a buyer. Tonen General holds 87.5% of Southwest’s stock, with Sumitomo Trading Company having the other 12.5%.
Brazil’s PETROBRAS is the state-owned oil company since being formed in 1953. It began producing bio-ethanol from sugar cane in 2006, and has begun deep sea oil exploration 7,000 meters beneath the ocean. Brazil predicts the combination of new oil revenues, plus bio fuels development, will boost its national economic structure.

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