Japanese oil distributor Showa Shell Sekiyu KK and Saudi Aramco Oil Co plan to collaborate on small-scale solar power projects in Saudi Arabia next year. Showa Shell will build small-scale solar power plants in areas not connected to the electricity grid as part of a solar venture with Saudi Arabian Oil Co. targeting expansion in the Middle East and Southeast Asia, spokesman Kenichi Morishita said by phone from Tokyo. The Japanese refiner plans to spend as much as 160 billion yen ($1.7 billion) over five years to expand its solar business as domestic demand for oil products wanes. “The Saudi project is the first step in its solar expansion, and investors are bidding up” the shares on today's news, Hidetoshi Shioda, a senior analyst at Mizuho Securities Co., said by phone from Tokyo. “Showa Shell's shares haven't reflected the impact of its solar expansion as the business hasn't yielded a profit yet.” In May, Showa Shell announced plans to spend close to $2 billion over the next five years to expand production of solar equipment. Under the agreement, Saudi Aramco will work with Showa Shell on several projects with generating capacities of 1 megawatt (MW) to 2MW each - for a total of about 10MW. The projects will be in areas where there is currently no grid-supplied electricity. They will employ copper indium diselenide solar cell made by Showa Shell in Japan its factory in Miyazaki Prefecture. If the projects are successful, the two companies intend to create a joint venture around 2012 to pursue similar projects in the Middle East, Southeast Asia, Africa and Latin America. Tokyo Electric Power Co (will provide support to the projects. Showa Shell Sekiyu's shares rose to the highest in nine months after saying it will build solar plants.
