Japanese Refiner Going Green? (SWSKF, RDS-A, BP, FSLR)

Japan’s fifth-largest oil refiner, Showa Shell Sekiyu (Pink Sheets:SWSKF), is partially owned by Royal Dutch Shell (NYSE:RDS-A) and Saudi Aramco, the Saudi Arabian national oil company, which hold 35% and 15% respectively. According to Reuters, the company plans to split an investment of $3.38 billion over the next five years equally between new oil projects and increasing the company’s solar capacity from 80 megawatts to 1,000 megawatts. The goal is to get the solar business to generate half the company’s profit by 2014.

When you think of an oil company making a large effort into solar power, which names comes up first?  Generally, most think of BP plc (NYSE:BP).  It is far too soon to think that reference may change, but this could be at least one starting point.

The company makes solar panels that do not use silicon, much like the panels made by First Solar Inc. (NASDAQ:FSLR). Showa Shell’s panels also do not use cadmium, a nasty toxic material.

The interesting thing here is Shell’s and Saudi Aramco’s efforts to get into the solar business. Shell has made a few halfhearted attempts to break into green businesses, but it has always seemed to lack the drive to make the big push. There had been talk in 2006 that Shell was considering an acquisition in the wind turbine market, but the deal never came about.

As for the Saudis, solar panels don’t really compete with oil, so why not hedge your bets a little, just in case there really is something to all this alternative energy business?

Paul Ausick
May 26, 2009