Idemitsu Kosan Co. Ltd. has decided to permanently shutter majority-owned Seibu Oil Co. Ltd.’s 120,000-b/d Yamaguchi refining complex that spreads across Ube City and Sanyo-Onoda City, Yamaguchi Prefecture, Japan, as part of the operator’s broader corporate decarbonization strategy amid declining domestic demand for petroleum products in line with the global energy transition.
As part of a June 14 transaction, Idemitsu Kosan increased its shareholding ratio in Seibu to 66.9% from its previous 38% ownership ratio to make Seibu an Idemitsu Kosan subsidiary, the two companies said in separate releases.
As part of the deal, Idemitsu Kosan will cease refining operations at Yamaguchi in March 2024, as well as terminate its product purchase agreement with Seibu—which currently supplies Idemitsu Kosan 5 million kl./year of gasoline, kerosene, jet fuel, diesel, Type A and C heavy oils, LPG, and chemicals such as xylene and benzene—effective Mar. 31, 2024, the companies said.
While it now technically controls decisions for its new subsidiary, Idemitsu Kosan plans to immediately begin discussions with remaining shareholders with the goal of making Seibu a 100%-owned subsidiary, Seibu said.
Alongside Idemitsu Kosan, major ownership ratios in Seibu ahead of the June 14 buyout belonged to:
- UBE Corp., 11.00%.
- Chugoku Electric Power Co. Ltd., 10.79%.
- Mitsui OSK Lines, 5.00%.
- Mizuho Bank Ltd., 5.00%.
Following the buyout, however, 25 other companies continue to hold shares in its operations, Seibu said.
Shifting landscape
Idemitsu Kosan said its decision to acquire Seibu and shut down the Yamaguchi refinery aligns with the company’s 2030 corporate vision that targets a system-wide business restructuring aimed at achieving carbon neutrality while also remaining competitive to ensure a stable energy supply.
With Japan’s domestic product demand projected to continue falling amid the country’s decreasing population, ongoing impacts of COVID-19, and global trends towards decarbonization, Idemitsu Kosan said terminating operations at Yamaguchi was the company’s best course of action.
The complex’s more-than 400 employees will continue to operate the refinery until its closure, but Idemitsu Kosan confirmed it also plans to find them placement post-closure elsewhere within the company and its remaining refining systems.
Following the refinery’s shutdown, Idemitsu Kosan and Seibu said they will continue to operate other assets at the site, including its storage, shipping, and solar-power generation businesses. Idemitsu Kosan additionally said it will consider developing new businesses at the site. The operator, however, disclosed no further details regarding those future plans.
In addition to Yamaguchi, Idemitsu Kosan’s Japanese refining assets include:
- its 160,000-b/d refinery in Chita, Aichi Prefecture.
- its 150,000-b/d refinery in Tomakomai, Hokkaido Prefecture.
- Showa Yokkaichi Sekiyu Co. Ltd.’s 255,000-b/d Yokkaichi refinery, in Yokkaichi, Mie Prefecture.
- TOA Oil Co. Ltd.’s 70,000-b/d Keihin refinery in Kawasaki City, Kanagawa Prefecture.
