An Irish engineering firm will help to develop some of the largest oil and gas deposits in the Far East after clinching a $25 million (€19 million) deal with a Japanese consortium.
The Kentech Group, which is based in Cork, has signed a deal with Japan's Chiyoda Corporation and Toyo Engineering to deliver the electrical and instrumentation installation work on a gas processing plant on Sakhalin island.
The gas plant on Sakhalin - an island off the coasts of Japan and Russia - is part of a $12 billion investment by international investors eager to tap into the region's oil and gas reserves. It is estimated that Sakhalin's oil and gas fields have reserves of more than 2.3 billion barrels of oil and 17.1 trillion cubic feet of gas.
Kentech, which is the parent company of Irish engineering firm Dornan Engineering, has also won several smaller engineering contracts on Sakhalin island with a range of international firms including ABB Lummus Global, Fluor Daniel Eurasia and Surface Production Systems. Under these contracts, the firm will help to set up early production facilities on the island. These facilities will be used to process oil and gas to enable it to be exported.
"We believe that, for us as a company, there will be between $40 million to $50 million over the next three to five years," says Ms Sarah Kent, a director of the Kentech Group.
"Sakhalin is a very interesting project because of the political situation between Japan and Russia. Over the next 15 years, about $30 billion will be invested on the island."
The ownership of Sakhalin island has swapped back and forth between Russia and Japan over the past two centuries and remains a divisive political issue. Russia - which gained sovereignty over the islands after the second world war - is currently developing the island for oil and gas production, which is due to begin shortly.
Kentech Group, which has had a local presence in Japan for more than 10 years, opened an office in Tokyo last year.
"We have worked with several Japanese clients in the past, including Mitsubishi," says Ms Kent. She acknowledges that business negotiations can take longer in the region.
"Culturally, it [ Japan] is very different and there is a significant amount of respect and honour in business."
Kentech also has overseas operations in Azerbaijan, Kazakhstan, Uzbekistan, Mexico and the US. It expects to generate revenue of $100 million in 2004.
