Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Sept. 9 -- Idemitsu Kosan Co., faced with declining domestic demand in its Asian markets, has signed an initial contract with Petroleos Mexicanos subsidiary PMI Trading Ltd. to supply it with 200,000 kl/year of gas oil.
Because of decreasing domestic demand in Japan and reduced demand from China, Idemitsu said it planned to refine 7.5 million kl of crude during October-December, down 1.2 million kl from the year earlier period
Most of the reduction will come from planned maintenance on Idemitsu's 120,000 b/d Tokuyama refinery while its other three refineries will operate at lower rates to keep inventories at proper levels. Altogether, the four refineries produce some 640,000 b/d of oil products.
Idemitsu's lower production reflects a recent 10% decline in the company's domestic gasoline sales, in addition to reduced demand for other products, such as diesel for trucks and buses, and kerosine.
While Japan's reduced demand is due largely to environmental factors, sales in China also have fallen because of a downturn in the US economy, which has been a major international consumer of goods produced by Chinese factories.
As a result of Idemitsu's reduced sales into Asian markets, company officials said it plans to increase oil products exports to Latin America generally and Mexico in particular.
"There is certain demand for gas oil from resources-producing countries in Central and South America" such as Mexico and Chile, said Takashi Tsukioka, an Idemitsu supply director.
Besides its gas oil contract with PMI Trading, Idemitsu also plans to export gasoline to Mexico and now is in talks with the Mexican government over specifications. "We are telling them that Japanese specifications are fine (for Mexico)," said Idemitsu sales director Seiji Fukunaga.
For its part, Mexico has increased its imports of oil products as the Pemex refinery system produced 1.5 million b/d of gasoline, diesel, and other fuels in January-July of this year, while imports of gasoline averaged 342,500 b/d, up 17.6% over January-July 2007.
Pemex said the total volume of petroleum product imports in January-July of this year rose to 555,100 b/d, on average, or 22.2% greater than such purchases during the January-July 2007 period, at a total cost of $14.08 billion (OGJ Newsletter, Sept. 1, 2008).
Contact Eric Watkins at [email protected].
