Japanese refiner considering new facility

Taiyo Oil Co., Japan's smallest refiner by capacity, is considering building an additional refinery, according to a senior company executive.

Sep 30th, 2008

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 30 -- Taiyo Oil Co., Japan's smallest refiner by capacity, is considering building an additional refinery, according to a senior company executive.

"I think it is an issue whether we can promise stable, safe operations with the single (current) refinery," said Taiyo Pres. Yutaka Oka, referring to the company's existing 120,000 b/d facility on Shikoku Island.

Japan's domestic oil demand has been falling since 2005 due to the adoption of energy-efficient technologies and energy diversification—a trend that is continuing.

According to the Ministry of Economy, Trade, and Industry, Japan's refiners and trading companies in August imported 1.2% less crude oil than a year earlier, with imports falling to 20.36 million kl or 4.13 million b/d.

In the same month, according to METI figures, Japan's overall oil product output fell 2.8% from a year ago to 18.60 million kl. End-month stocks of overall oil products increased 1.9% from last year to 14.44 million kl in the month, METI said.

Despite those figures, Oka said there is room for the company to increase its 2% market share. At the same time, however, Taiyo—like other Japanese refiners—has been stepping up production to meet overseas demand, especially in China.

Japan's gasoil exports nearly tripled to 1.3 million kl during January-November 2007 versus the same period a year earlier, according to METI figures issued late last year.

In January of this year, Taiyo said it expected to export 600,000 kl of oil products the fiscal year ending in March, twice as much as it exported the previous fiscal year.

Earlier, in August 2007, Taiyo said it would start to ship diesel fuel directly to China, aiming to export 80,000 kl of light oil in fiscal 2007 and about 150,000 kl/year from fiscal 2008.

As a result of the change, it was expected that Taiyo Oil's fuel exports, including light oil, would likely rise from around 220,000 kl in fiscal 2006 to 300,000 kl in fiscal 2007, roughly 10-20% of the light oil produced by the firm.

Contact Eric Watkins at hippalus@yahoo.com.

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