Japan calls for increased refining capacity to ease shortages

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 18 -- Japan’s government is pursuing a number of emergency measures to deal with fuel shortages that include shipping 38,000 kl of oil products by sea from refineries in Hokkaido and western Japan to the Tohoku region, hard-hit by the recent earthquake and tsunami.

Minister of Economy, Trade, and Industry Banri Kaieda called on the Petroleum Association of Japan (PAJ) to implement the emergency steps after earlier urging oil distributors to release 1.26 million kl for supply to the market.

Kaieda said the government will secure 38,000 kl/day of oil products to be shipped by sea to oil storage facilities in Akita and Niigata prefectures from 13 refineries in Hokkaido as well as Sakai, Mizushima and elsewhere in western Japan.

Kaieda also called for the operating rates of refineries in western Japan, which stand at around 80%, to be raised to at least 95%.

Idemitsu Kosan Co., JX Nippon Oil & Energy Corp., and other major oil distributors already are stepping up their own efforts to alleviate Japan's fuel shortage.

Idemitsu will raise utilization rates at all of its domestic refineries. It had expected the rate to be at around 85-90% for the first quarter, but will now lift it to almost full capacity.

On Mar. 17, JX Energy shipped 5,000 kl of gasoline by sea to a facility in Yokohama from its Mizushima refinery in western Japan.

In addition to boosting supplies to the Kanto region, JX Energy also planned as soon as today to transport gasoline, light oil and other products by rail along the Sea of Japan coast to relieve earthquake-hit regions.

Cosmo Oil Co. said it has increased refining capacity at its Yokkaichi and Sakaide facilities in western Japan by a combined 80,000 b/d.

Cosmo’s 220,000 b/d Chiba refinery was damaged in the quake, so the firm will increase capacity by more than 20% at other refineries to cope with shortages.

Showa Shell Sekiyu KK said it will transport oil products from refineries in Kawasaki and elsewhere to terminals in the cities of Niigata and Akita before trucking them overland to afflicted areas in Miyagi and Iwate prefectures.

PAJ Pres. Akihiko Tembo said the increased refinery utilization—combined with emergency imports of 450,000 kl and suspended exports of 650,000 kl—represent “a total 1.4 million kl of additional supply” or more than 3 days' worth of Japanese consumption.

PAJ earlier said last week’s earthquake and tsunami stopped six refineries, including JX Nippon Oil & Energy Corp.'s Sendai facility, the only refinery in the Tohoku region, closest to the epicenter.

In addition, JX Nippon Oil & Energy Group was forced to stop operations at two other locations: its Kashima refinery in Kamisu, Ibaraki Prefecture, and its Negishi refinery in Yokohama.

Two other refineries also have stopped operating in Ichihara, Chiba Prefecture—one owned by Cosmo Oil Co. and the other by Kyokuto Petroleum Industries Ltd.

Altogether, the capacities of the six refineries come to more than 1 million b/d, or more than 25% of Japan's overall capacity.

Foreign oil firms respond
Foreign oil companies also are increasing their efforts to supply Japan with needed supplies of oil and gas.

Chevron Corp. has arranged for a tanker to ship oil from Indonesia to Japan for use in Tokyo Electric Power Co.'s power plants and is in negotiations to secure additional vessels.

A Chevron spokesman said the moves are in response to energy demand in Japan, where fuel is in short supply following the earthquake and tsunami.

Royal Dutch Shell PLC is making preparations to direct as many extra oil and LNG tankers as possible to Japan. The company supplies the fuels to Japan under long-term contracts, but is supplying extra beyond its normal quotas.

Analysts at Nomura International Ltd. said Japan’s oil demand may jump by 3.9%, or 171,000 b/d, as the country seeks alternative power sources after the earthquake and tsunami disabled nuclear power plants.

Japan will make up for the bulk of the nuclear power losses by boosting output in oil- and natural gas-fired power plants, said Nomura, basing its estimates on the effect of quakes in 1995 and 2007.

Other analysts concurred with Nomura’s outlook.

Commerzbank said, “4% of Japan's power plant capacities are offline on a sustainable basis after nuclear power plants have been shut down, meaning that Japan's energy requirements have to be covered to a greater extent by fossil fuels such as oil, coal and gas."

Deutsche Bank analysts said in a research note, "It is odd to think of Europe or Japan as potential growth markets for thermal coal.”

They continued, “However, with nuclear power production apparently moving into reverse in these two regions, the outlook for fossil fuels such as thermal coal, in addition to natural gas and oil, appears much more promising.”

In recent days, the price of uranium—used to generate nuclear power—has slumped by 25% while the costs of coal and gas have soared by more than 10%.

The International Atomic Energy Agency said Japan will need an additional 200,000 boe/d for power plants to offset electricity generation lost from the nuclear power plants that were shut down following the earthquake and tsunami which struck the country on Mar. 11.

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

SIBUR plans MTBE expansion at Togliattikauchuk

07/01/2015 Russian conglomerate OAO SIBUR Holding, Moscow, has started preparatory work for a project designed to expand production capacity for methyl tertia...

OxyChem-Mexichem JV lets contract for ethylene storage

06/30/2015 Ingleside Ethylene LLC, a 50-50 joint venture of Occidental Chemical Corp. (OxyChem) and Mexichem SAB de CV (Mexichem), has let a contract to CB&am...

RIL’s Jamnagar refinery due maintenance

06/29/2015 Reliance Industries Ltd. (RIL), Mumbai, is planning to shut down a crude unit for scheduled maintenance at its 1.24 million-b/d Jamnagar refining a...

OGJ Newsletter


BP: US surpassing Saudis in oil output among world's 'tectonic' energy shifts in 2014

06/29/2015 An eventful 2014 in the world oil and gas markets was headlined by the US overtaking Saudi Arabia as the world's biggest oil producer and surpassin...

Gazprom Neft lets contract for Moscow refinery

06/29/2015 Russia's JSC Gazprom Neft has let a contract to Tecnimont SPA, a subsidiary of Maire Tecnimont SPA, Milan, for engineering, procurement, and constr...

Marathon commissions unit at Kentucky refinery

06/29/2015 Marathon Petroleum Corp. (MPC) has commissioned a 35,000-b/d condensate splitting unit at its 242,000-b/d Catlettsburg, Ky., refinery to boost the ...

Petronas lets contract for RAPID complex

06/26/2015 Malaysia’s state-run Petronas, through a contractor, has let a contract to Industrial Cooling Solutions Inc. (ICS), Lakewood, Colo., to build a 28-...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected