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Japan: First supplies of oil, gasoline reach Sendai port

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 22 -- ExxonMobil Corp.’s Shiogama Terminal in Sendai, which reopened on Mar. 20, has received its first tanker shipment of much-needed fuel, including 2 million l. of gasoline, light oil, and kerosine.

“The terminal is a key distribution point for the impacted area and is also being used by other companies to bring in needed supplies,” an ExxonMobil spokesman told OGJ.

Japan is facing a power shortage after a 9.0 magnitude earthquake and an ensuing tsunami struck the country on Mar. 11 and forced the Japanese authorities to shut down some of the country's nuclear power plants and resort to rolling blackouts.

The spokesman said all four refineries of the ExxonMobil Japan Group are fully operational including ExxonMobil affiliate Tonen General's Kawasaki, Sakai, and Wakayama facilities and Kyokuto Petroleum Inc.'s Chiba facility, a joint venture of ExxonMobil and Mitsui & Co.

“All facilities are maximizing production of products—gasoline, diesel, kerosine—urgently needed to assist in the response and recovery efforts,” said the spokesman, who noted that supplies are being moved to the impacted areas via tanker truck and rail.

“We are working with the industry and the government to ensure emergency responders have adequate fuel and heating supplies, and we've made in-kind donations of some 1,000 drums towards this end,” he said.

ExxonMobil’s announcement came amid reports that Japan’s petroleum production and distribution infrastructure destroyed by the Mar. 11 earthquake and tsunami is resuming operations.

Indeed, Japan’s Ministry of Economy, Trade, and Industry said restoration of adequate fuel supplies was not expected to be a lengthy process because the country has an excess of refining capacity.

According to OGJ’s 2010 Worldwide Refining Survey, Japan has 4.73 million b/d of crude refinery capacity across 30 facilities.

While it will take a while for a sufficient amount of fuel to be distributed across devastated northeastern Japan, reports said that gasoline shortages may end as soon as this week in certain portions of the Tokyo metropolitan area.

Six of Japan’s 30 oil refineries—including JX Energy’s Sendai refinery, a key regional facility—were seriously damaged by the quake.

Although the quake triggered an automatic shutdown at JX Energy’s Yokohama facility, equipment was not damaged. As a result, JX Energy plans to gradually bring its Yohohama facility back to full production.

JX Energy’s largest refinery in Okayama Prefecture raised its refinery capacity to 400,000 b/d from 380,000 b/d.

Cosmo Oil Co. said it has extinguished fires that broke out at a refinery in Ichihara, Chiba Prefecture. The firm said it plans to conduct safety checks as early as this week so that it can at least begin shipping inventory.

Boost of supplies to Japan
Meanwhile, Russia’s Deputy Prime Minister Igor Sechin said his country is already boosting energy supplies to Japan and that it plans to double oil exports and increase oil product supply in 2011.

"Oil exports to Japan will double in 2011 to 18 million tons," said Sechin, who added that Russian exports of oil products to Japan would grow to 4.5 million tons from the current 3.5 million tons.

Sechin also said that Japan may also join Russia's largest oil producer OAO Rosneft in the construction of a petrochemical facility in the Russian Far East.

"We are also offering Japan participation in Russian oil refinement projects. I can say we have almost come to an agreement," Sechin said.

Meanwhile, Sechin said, "We have agreed that we will boost energy supplies to Japan in the short term. The first tanker is already on its way and 100,000 tons of LNG have already been redirected to Japan.”

Sechin’s statement came as Tokyo announced that more of the private-sector's petroleum reserves would be used to ease supply shortages stemming from earthquake, releasing 25 days' worth of fuel into the market.

The oil industry is required by law to keep 70 days' worth of petroleum reserves, but METI decided Mar. 14 to lower the requirement to 67 days. Altogether, METI has decided to tap an additional 22 days, or 9.24 million kl.

On Mar. 21, Sendai-based Tohoku Electric Power Co. said it may restart the 350-Mw Minato No. 1 unit at its Higashi Niigata thermal power station in Niigata Prefecture in northwestern Japan to meet electricity demand.

The Minato No. 1 unit uses natural gas and heavy fuel oil, but TEP last April suspended its operations indefinitely after deciding to focus on more efficient thermal power plants.

Sendai is near the epicenter of the most recent quake. Most of TEP’s power-generating facilities along the Pacific coast were seriously damaged by the earthquake and resulting tsunami.

Traders are betting that Japan is likely to turn to oil—mainly low-sulfur fuel oil or low-sulfur crudes—as replacement power-generation fuel after the earthquake and tsunami caused the shut-down of key nuclear facilities.

“Right now, it's not clear how much fuel oil they are going to buy, but it is quite certain that they will, and in large volumes," said a Singapore-based Japanese trader (OGJ Online, Mar. 21, 2011).

Contact Eric Watkins at hippalus@yahoo.com.


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