Petrobras buys out Okinawa refiner; plans marketing hub

Brazil’s Petroleo Brasileiro SA (Petrobras) plans to turn Okinawa refiner Nansei Sekiyu KK into a wholly owned subsidiary and an Asian oil supply base.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 6 -- Brazil’s Petroleo Brasileiro SA (Petrobras) plans to turn Okinawa refiner Nansei Sekiyu KK into a wholly owned subsidiary and an Asian oil supply base.

Petrobras is to acquire the remaining 12.5% of Nansei from Sumitomo Corp. for an undisclosed sum. The Brazilian firm acquired 87.5% of Nansei from TonenGeneral Sekiyu KK for ¥5.5 billion in 2008 (OGJ Online, Apr. 2, 2008).

Initially, Petrobras was to furnish Brazilian crude to Nansei to be processed into light oil and raw chemical material for export to Asian markets. But it has since decided to use Nansei as a base for storing and exporting oil to other Asian refineries. Petrobras will deliver 1.8 million bbl of oil to Nansei every 2 months for onward shipment.

Petrobras is expected to begin selling its crude from Nansei this month. According to market reports, it is to ship 950,000 bbl of medium heavy Roncador 28 crude from South America to Nansei, with the arrival date scheduled Apr. 18-19 after a 5-week voyage via the Cape of Good Hope and the Malacca Strait.

Petrobras cannot process the 24-28° gravity crude at the Nansei refinery, however the oil is said to be a good match for Asia's markets as China and South Korea recently developed upgrading capacities to process heavier grades.

Petrobras has five 100,000 cu m storage tanks at the facility.

The shipments are likely to add more than 33,000 b/d to Brazil's crude sales to northeast Asia, though traders said changing price conditions and freight economics could prompt Petrobras to sell part of the cargo before it reaches Okinawa.

New export strategy
Traders said the new export strategy will help Petrobras split transoceanic shipments into smaller vessels, supplying refineries that lack port facilities or storage to receive very large crude carriers in Japan, South Korea, China, and Malaysia.

Sumitomo and Petrobras originally were to spend as much as ¥100 billion to upgrade the Nishihara facilities and boost the cost competitiveness of the refinery as an export base. But Petrobras shelved those plans last April due to reduced demand. Instead, it focused on use of the storage tanks to implement its new export strategy.

Petrobras will shut down the 100,000 b/d Nansei Sekiyu KK refinery for maintenance from May 17 to July 2.

Contact Eric Watkins at hippalus@yahoo.com.

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