Oil Diplomacy Editor
JX Nippon Oil & Energy reported it has reduced its oil imports since the Mar. 11 earthquake and tsunami, as two of its eight refineries remain severely damaged and unable to operate.
A company spokesman said overall oil consumption has been lower than planned, although the firm—Japan's largest refiner by capacity—has been running most of its unaffected refineries near full capacity.
The announcement followed earlier reports that said oil futures prices rose 1.6% on speculation Japanese rebuilding efforts will bolster fuel consumption, with gasoline production recovering to nearly to the point where it stood before the devastating quake.
"Japanese oil demand took a hit initially but is going to rebound in spades," said Bill O'Grady, chief market strategist at St. Louis-based Confluence Investment Management. "The situation won't be resolved soon and will probably get worse before it gets better (OGJ Online, Mar. 23, 2011)."
JX Nippon's announcement came as the Japanese government began discussing the possibility of introducing daylight saving time as a way to reduce power consumption during the peak summer season.
According to some estimates, Japan would save an equivalent of 900,000 kl/year of oil if DST is introduced nationwide. The government also is considering limiting power use at businesses, as well as extending the summer break and staggering the country's Bon holidays, when many factories and offices close.
There are even calls for corporations to move production and other operations to western Japan to reduce power consumption in the greater Tokyo area, which is supplied by the Tokyo Electric Power Co (Tepco).
The government's discussion came after Tepco said Mar. 25 that its power output is expected to fall about 8.5 million kw short of demand this summer—an estimate far too low, according to government figures.
The Ministry of Economy, Trade, and Industry disagreed with Tepco's estimate, saying that the power shortage may reach 15 million kw this summer based on the view that demand could again spike at 60 million kw just as it did last summer.
A ministry official said Tepco can provide only 45 million kw of output capacity, leaving the shortfall of 15 million kw or nearly twice as much as the utility predicted.
Meanwhile Tepco is conducting rolling blackouts in greater Tokyo. Tepco aims to end the rolling blackouts in May.
Tepco said it plans to increase its output capacity to 46.5 million kw by the end of July through such steps as bringing damaged fossil-fuel-fired plants back online and setting up gas turbine facilities.