JAPANESE FIRMS TO HIKE DEEP CONVERSION

Japanese refiners are scrambling to expand their deep conversion capacity to accommodate growing demand for gasoline, kerosine, and gas oil.

Several cash rich Japanese refiners have earmarked outlays approaching $2 billion for fluid catalytic cracking units and related equipment to desulfurize and directly crack residual fuel oil from primary distillation units, OPEC News Agency (Opecna) reported. Japanese demand for resid has been declining lately.

Meanwhile, Mitsubishi Oil Co. Ltd. plans to take over and revamp a troubled refinery owned by a unit of Fuji Kosan Co. Ltd. Mitsubishi earlier this month was to register a new company for the venture to be capitalized at $96 million. The new venture will refine 40,000 b/d of crude from Mitsubishi and produce 18,000 b/d of lube oil and asphalt for Fuji Kosan.

CONVERSION PROGRAM

The Japanese deep conversion capital program precedes the Ministry of International Trade and Industry's proposed removal of ceilings on refining capacity levels.

MITI is undertaking that step as part of a general deregulation of Japan's oil industry. Those capacitor ceilings, introduced in 1987, are expected to disappear at the end of Japan's current fiscal year Mar. 31, Opecna said. That's likely to cause a decline in Japanese imports of refined products.

At the same time, industry analysts contend, the refinery expansions are expected to make Japanese refiners more competitive with U.S. and European refiners, which have much greater deep conversion capacities.

Among projects planned are:

Itemitsu Kosan Co. Ltd.'s new FCCU and desulfurization units at its Hokkaido refinery, to be installed in fall 1994 at a cost of $775 million.
Nippon Oil Co. Ltd.'s new 30,000 b/d FCCU at its Negishi refinery in Kanagawa prefecture. The $640 million project, which includes direct desulfurization facilities, is to be complete in August.
Mitsubishi's new $320 million, 25,000 b/d FCCU at Tohoku Oil's Sendai refinery in Miyagi prefecture.
Itemitsu's proposed FCCU expansion at its refinery in Aichi prefecture to 40,000 b/d from 33,000 b/d.