Company history

Nippon Kihatsuyu — Japan Gasoline — was incorporated in October 1928 in Kojimachi, Tokyo, by Saneyoshi Masao and his partners with capital of ¥2.5 million, and the following month it signed with the American firm Universal Oil Products for the Japanese rights to the Dubbs thermal-cracking process. The plan had been to buy the patent and refine oil itself, at a refinery to be built in Otsu. The Showa depression took away the money, and with it the plant. What remained was the patent — so the company sold the right to use it to Nippon Oil and the other domestic refiners, and became a business that sold knowledge rather than equipment. The name it kept for forty-eight years referred to a refining business it never entered.

Owning no plant turned out to fit the market: Japanese oil companies had no investment capacity either, and a licensor without fixed assets could live off royalties. The first Dubbs unit went to the South Manchuria Railway in 1933; isooctane licences followed to the army, the navy and the refiners, and with them came design work and catalyst development. War severed the UOP agreements and cut off the source of technology altogether, and the company built its own catalyst plant at Niitsu, Niigata, in 1942. In the years around 1941–42 it also opened a design office and a laboratory — the first move from merely licensing patents toward drawing the plans and assembling the plant in-house.

Defeat left it idle. Capital was written down from ¥2.5 million to ¥2.25 million under the reconstruction law in 1948, and the business only revived when Japanese refineries restarted operating in 1950–51. In May 1952, after fourteen years apart, the company signed a new agreement with UOP covering refining and petrochemical processes — this time a blanket right to sub-license everything UOP owned in Japan, and to design and build the plants that used it. A Yokohama engineering department followed in July, the catalyst works was spun off as Nikki Chemical in August, and by December it was a registered contractor.

The turn came in 1956, when the company took full responsibility for Idemitsu Kosan’s refinery at Tokuyama — no longer delivering units one at a time but building the whole refinery. From there it followed Japan’s refining and petrochemical boom. The UOP tie-up paid twice over: forty to fifty per cent of the royalties flowed back to it, at times ¥400–500 million in a half year, and any facility using a UOP process was in principle its to design and build. Between six and seven of every ten core units in Japan’s refineries were its work; in refining it split the market with Chiyoda Corporation. It was also one of only two pure engineering firms in Japan with no machine shop of its own — the other being Toyo Engineering.

It listed on the Tokyo Stock Exchange Second Section in May 1962 with capital of ¥150 million, 827 employees and a shareholder register of just 150 names, of which exactly one was a corporation: the president, Saneyoshi Masao, personally held more than two-thirds of the shares. The published accounts showed how strange the business was. In the half year to September 1961, patents were 13.6% of sales and construction 61.2% — but of net profit, patents were 48.7%. A tenth of the revenue produced half the earnings, because the company built nothing itself and left fabrication to subsidiaries and subcontractors. It moved up to the First Section in 1969.

Growth then moved offshore. Orders of ¥10 billion came in 1965 from Peru, Venezuela and Argentina — the Peruvian job won on deferred-payment terms against Kellogg and McKee — and headcount went from 130 to 1,300 in a decade. In 1966 the company built the world’s first heavy-oil desulfurization unit for Idemitsu at Chiba, and entered nuclear work with a reprocessing design won alongside Saint-Gobain. Then came the bill: a ¥25 billion refinery in Algeria ran roughly $16.2M (¥5bn) into the red around 1972, forcing a dividend cut and cancelled bonuses. President Shinoda Haruo blamed floods, an overestimate of local labour, wages that tripled during construction — and, above all, a lump-sum contract that left no way to recover any of it. Cost-plus-fee contracts entered the repertoire from then on.

In October 1976 Nippon Kihatsuyu dropped the gasoline from its name and became JGC Corporation. In the same year it won Algeria’s Modules I and II — gas and LPG separation plants in the Sahara — for ¥145 billion, and a second tranche a year later took the programme to roughly ¥300 billion, so that a single country accounted for about half of group sales. Chairman Suzuki Yoshio, who had run the company for fourteen years, argued that risk abroad is unavoidable and that what covers it is a record and a reputation with the client; he also said plainly that work should never be concentrated in one place beyond the company’s own capacity — while conceding that Algeria had become exactly that. Exports reached 75% of sales, and revenue tripled from ¥99.6 billion in fiscal 1975 to ¥308.9 billion in fiscal 1981.

Orders kept coming — a $1 billion refinery modernization awarded by Kuwait without tender in 1981, a ¥500 billion Australian LNG plant in 1982 won in a straight fight with Fluor — but the profit did not. Operating margin fell from 3.4% in fiscal 1979 to 0.4% in fiscal 1981: loss-making jobs hid among more than 150 projects a year, and Japanese shipbuilders and heavy-machinery makers, busy again, stopped bidding cheap. JGC opened procurement bases in Houston and Paris, but overseas sourcing was still only 10–20% of materials. President Shinoda’s standing instruction was to stop concentrating work in one country. Meanwhile the company pushed into fields other than refining — radioactive-waste treatment, which no other Japanese firm and not even Bechtel then handled, stood at ¥80 billion of order backlog by 1982.

The yen broke the model. After the 1985 Plaza Accord the dollar lost half its value by January 1988, and with about 70% of sales overseas and materials bought at home, projects priced in dollars turned unprofitable across the board: four consecutive years of operating losses from the year to March 1986. Inside the company it had become acceptable to bid at a loss and finish at a loss. Watanabe Eiji, head of the international division, took over as president in June 1988 and raised overseas procurement from 10–20% to a target of 50% — moving the source of cost out of Japan altogether. Overseas purchasing reached ¥34 billion in fiscal 1989, orders for the year to March 1990 nearly tripled to $4.2B (¥601bn), and the company returned to operating profit for the first time in five years. The swings did not stop: the years to March 1997 and 1998 both ended in net losses, though rivals Chiyoda and Toyo Engineering fared far worse.

The resource boom of the 2000s filled JGC’s core markets with LNG and refinery work. Consolidated revenue grew from ¥378.0 billion in the year to March 2003 to ¥675.8 billion by March 2014, and profit grew faster still: operating profit reached ¥67.1 billion in the year to March 2012, an operating margin of 12.0% — the same company that had earned 0.4% three decades earlier. The procurement restructuring of the late 1980s was what held project costs down. Alongside it, JGC consolidated its materials arm, taking full ownership of Catalysts & Chemicals in 2004 and merging it with Nikki Chemical in 2008 to form JGC Catalysts and Chemicals, supplying refining catalysts and nano-particle materials for displays, semiconductors and cosmetics.

Two events in 2013 marked the limits and the reach of the business. In January, Islamist militants attacked the gas facility at In Amenas in southeastern Algeria — the country JGC had worked in for nearly forty years — and 48 people died, ten of them JGC staff; the loss shook even a company widely regarded as the best-prepared in Japan for overseas risk. In October, JGC won its first major North American job, a 1.5-million-tonne ethylene plant in Texas for Chevron Phillips with Fluor, worth some ¥200 billion — a market until then held by Bechtel and KBR and opened up by cheap shale gas. Earnings were at record highs on both sides of it.

Then oil and gas prices fell, and the weakness of lump-sum contracts — the contractor absorbs deferrals and design changes — reappeared. The year to March 2017 brought an operating loss of $191.7M (¥22bn) on revenue of ¥693.1 billion, the first loss in nineteen years; the incoming president, Ishizuka Tadashi, told staff there was arrogance and overconfidence in the company, and that project reality was not reaching management intact. The structural answer came in October 2019: a holding company, JGC Holdings, splitting overseas EPC into JGC Global, domestic EPC into JGC Japan, and materials into JGC Catalysts and Chemicals, so each business carried its own P/L. The split was tested immediately — a ¥57.5 billion charge on Australia’s Ichthys LNG in the year to March 2022, then further Saudi losses producing operating losses in both March 2024 and March 2025. With those contracts worked through, the year to March 2026 closed at ¥745.3 billion of revenue and ¥35.4 billion of operating profit, and JGC now aims its EPC capability at decarbonization work — SAF, hydrogen, ammonia — and, through the Nixyte venture with Germany’s Exyte, at semiconductor plants and data centres.