By Chris Cooper and Kiyotaka Matsuda

(Bloomberg) — Nippon Yusen Ok.Ok., Japan’s largest delivery line, is seeking to purchase an organization concerned in deep-sea oil and gasoline operations as a drop in costs of the commodities makes it cheaper to accumulate such belongings.

The firm is contemplating deep-sea pipe-laying companies amongst others, and should spend “several tens of billions of yen,” equal to a number of hundred million {dollars}, to accumulate an organization, Hitoshi Nagasawa, head of the vitality division, mentioned in an interview in Tokyo.

Nippon Yusen is increasing oil and gasoline improvement actions to fulfill vitality demand from China, Vietnam and different rising markets, and because it projected a loss for its key container-shipping enterprise within the fiscal half ended March. The firm final 12 months introduced a plan to function its fourth crude oil floating manufacturing, storage and offloading vessel with different companions, and in 2010 invested in a tanker enterprise to convey crude ashore.

“The plunge in crude prices means companies are looking to sell assets and offshore oil-related companies are struggling financially,” Nagasawa mentioned April 6. “We’re looking for areas we don’t have expertise in, which are growing and where barriers to entry are high.”

Nagasawa mentioned he expects to make an announcement on the deliberate acquisition within the present fiscal 12 months ending March 31.

Oil Declines

Crude oil costs have dropped greater than 60 p.c previously two years. Subsea 7 SA, a London-based firm that installs pipes for the oil business, has seen its market worth fall by about half in that interval to 19 billion kroner ($2.3 billion) because the decline in oil costs curtails drilling exercise.

Nippon Yusen isn’t contemplating shopping for Subsea however is smaller firms with comparable operations, Nagasawa mentioned.

Ezra Holdings Ltd., a S$300 million ($222 million) Singapore-based supplier of offshore logistics to the oil and gasoline business, and Japan’s Chiyoda Corp. agreed in August final 12 months to kind a subsea companies three way partnership.

“Without a doubt oil demand is going to expand as the population increases,” mentioned Nagasawa. “The standard of living is improving and that consumes more energy. In Vietnam people have switched to motorbikes from bicycles. Demand isn’t going away.”

Methane Hydrate

Nippon Yusen fell 1.5 p.c to 200 yen as of 9:20 a.m. in Tokyo buying and selling Friday. The firm has misplaced 31 p.c this 12 months by way of Thursday, whereas the Nikkei 225 Stock Average has declined 17 p.c.

Nagasawa mentioned an oil-business acquisition would additionally assist Nippon Yusen present companies to assist extract Japan’s methane hydrate gasoline deposits, which can be price as a lot as 300 trillion yen ($2.8 trillion). Reserves of the gasoline are trapped in ice under the seabed round Japan.

“It’s our biggest opportunity,” Nagasawa mentioned. “Development would need FPSOs and shuttle tankers.”

© 2016 Bloomberg L.P