Japanese Refinery Exports May Decline Further Due to Domestic Redirection of Products

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Researched by Industrial Info Resources (Sugar Land, Texas)--Roughly 15% of Japan's refining capacity, or up to 635,000 barrels per day (BBL/d) from three refineries, is down. However, due to decreasing demand, many refineries throughout Japan already were running below capacity, including the currently shuttered refinery in Kashima, Ibaraki, which belongs to Kashima Oil Company Limited, a subsidiary of JX Nippon Oil and Energy Corporation (TYO:5001) (Tokyo). Kashima's 270,000-BBL/d refinery was producing a maximum of 200,000 BBL/d prior to March 11's earthquake.

Refineries running below maximum operating capacity are now being pushed to full capacity to compensate for the major imbalance in demand and supply. Idemitsu Kosan Company Limited (TYO:5019) (Tokyo) is ceasing all exports and will redirect its products domestically to aid in shortages. In 2010, exported gasoline, kerosene, diesel, and jet fuel totaled 18.87 million barrels. Idemitsu owns and operates four refineries located in Tokuyama, Aichi, Hokkaido, and Chiba, and was unaffected by March 11's earthquake and subsequent tsunami.

Exported products from these four refineries, comprising gasoline, kerosene, diesel, and jet fuel, totaled 18.87 million barrels in 2010. All four of these refineries were running below full operating capacity for a total of 870,000 BBL/d prior to March 11. Idemitsu's full operating capacity is 1.06 million BBL/d, and the company is currently boosting refining efforts to meet domestic demand.

Officials at the 220,000-BBL/d refinery in Ichihara, Chiba, which belongs to Cosmo Oil Company Limited (TYO:5007) (Tokyo), began overland transport of products on Thursday, March 24, though it remains shut down. These products, including diesel and gasoline, have been salvaged from 11 undamaged tanks at the refinery, and transports are bound for Saitama prefecture and other parts of the Chiba prefecture. Cosmo's Ichihara refinery was severely crippled by the March 11 events. Kashima is also following suit, but is redirecting its salvageable products to a terminal in Morioka, Iwate.

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