November 1, 2010 at 4:04 pm #2479
Japan’s AOC says Fuji Oil scraps 52,000 bpd CDU
Reuters – Monday, November 1, 2010
* AOC says its Fuji Oil unit scraps long-idled CDU
* AOC to meet METI regulations after move
TOKYO, Nov 1, 2010 – AOC Holdings said on Monday that its wholly owned refiner, Fuji Oil Co, on Oct. 29 scrapped the idled 52,000 barrels per day No.1 crude distillation unit at its Sodegaura refinery, east of Tokyo.
The move to close the CDU, which has been idle since 2000, will help Fuji Oil meet trade ministry regulations calling for drastic steps to boost refining efficiency.
An AOC spokesman said the decision has been filed with the trade ministry. The new trade ministry rules call for refiners to ramp up their ability to process heavy oil into lighter oil products by March 2014 by either building new residue cracking units or scrapping refining capacity. Industry watchers have said only the latter looks feasible.
CER – Here is another article from one my Technology contacts that list status at other Japanese Refineries in meeting the new processing regulations:
Exxon, Cosmo Oil May Shut Refineries in Japan, Analysts Say
By Tsuyoshi Inajima and Yuji Okada – Oct 31, 2010 10:54 PM CT
Exxon Mobil Corp. Japanese unit, JX Holdings Inc. and other refiners may cut their capacity by about 30 percent to meet government requirements to modernize facilities or reduce output, three analysts said.
Japanese oil refiners were required to submit proposals by yesterday to meet new rules announced by the trade ministry in July to increase the proportion of gasoline and gasoil they produce from residues, a cheaper way to extract fuel.
Demand for gasoline and other fuels in Japan is forecast to decline by an average of 3.5 percent annually through March 2015 because of a falling population, according to a trade ministry report. Refiners must choose between cutting capacity or upgrades, according to the trade ministry. Upgrades can cost as much as 100 billion yen ($1.2 billion), said Takashi Miyazaki, a Tokyo-based analyst at Citigroup Inc.
The new regulation is good for the industry as a whole because the 30 percent reduction in capacity will be offset by the decline in fuel demand, Miyazaki said.
[color=#ff0000 size=2]The regulations require refiners to increase the proportion of gasoline and gasoil they produce from residues, which trade at a discount to crude oil. The rules are meant to compel Japanese refiners to modernize refineries or cut capacity in an oversupplied market so they can compete more effectively with Asian rivals, according to the trade ministry.
[color=#ff0000 size=2]Submitting Proposals
About 10 percent of the country capacity is dedicated to heavy oil processing, compared with a ratio of 36 percent in China and an average of 19 percent in Asia, the ministry said in April. Japan has refining capacity of nearly 4.6 million barrels per day as of Oct. 23, according to the Petroleum Association of Japan.
The real objective of this regulation is to reduce capacity, Hidetoshi Shioda, a senior analyst at Nikko Cordial Securities Inc., wrote in a report on Oct. 25.
[color=#0000ff size=2]Exxon TonenGeneral Sekiyu K.K., the country second- biggest refiner after JX, submitted a proposal on Oct. 29 that included rationalization and investment, spokeswoman Kana Tadokoro said in an e-mailed statement in response to an inquiry from Bloomberg.
TonenGeneral may shut its 156,000 barrel-a-day Sakai plant near Osaka while Cosmo Oil Co. may close the 110,000 barrel-a- day Sakaide refinery, in western Japan, Miyazaki said.
Cosmo Oil has passed its proposal to the ministry, said Cosmo Oil spokesman Katsuhisa Maeda, declining to comment on the details.
[color=#ff0000 size=2]Mothballing Plants
JX, Japan biggest refiner, submitted its plan on Oct. 29, a JX official said. The company in May announced plans to reduce capacity by 600,000 barrels a day by March 2014 and mothballed a crude distillation unit at its Negishi refinery near Tokyo last week.
JX will probably close its 180,000 barrels-a-day Muroran refinery in Hokkaido in northern Japan and cooperate with Idemitsu, which owns a refinery nearby, on distributing fuel products, Miyazaki said.
Showa Shell Sekiyu K.K., the fifth-biggest refiner in Japan, said in February it will mothball its 120,000 barrel-a- day Ogimachi plant in the summer of 2011.
Showa Shell won need to cut capacity further to meet the trade ministry$B!G(Js target, Miyazaki said. The Tokyo-based company has filed a plan with the ministry, spokesman Kenichi Morikawa said by phone today.
[color=#ff0000 size=2]Cutting Capacity
Idemitsu Kosan Co., Japan third-biggest refiner, has announced plans to cut 100,000 barrels a day of capacity by March 2013. The company submitted its compliance plan on Oct. 29, said spokeswoman Maki Yasunaga.
None of the refineries would comment on the details of their plans.
The trade ministry and refiners all clam up on this, Osamu Fujisawa, an independent oil economist in Tokyo who formerly worked at Showa Shell and Saudi Arabian Oil Co. But oil companies will be eventually forced to tell shareholders about their plans because this is very important for their share price.
The Topix Oil & Coal Index, which includes most of Japan refiners, is up 11 percent this year while the benchmark Nikkei 225 Stock Average has fallen about 13 percent.
To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at email@example.com; Yuji Okada in Tokyo at firstname.lastname@example.org.
November 1, 2010 at 4:06 pm #5432
Here are couple articles around Japan’s Refining companies plans to meet the new Japanese Processing Regulations designed to modernize & increase resid processing. cut capacity or close to remove surplus capacity from the market.
Could go either way as either Good news or bad news for Japan coking projects?
Several have submitted their proposals as required, others have announced mothballing plants or cutting capacity and few like AOC have announced scrapping capacity.
Japan and Europe are at lead on global refining consolidation of small, regional, simple/less complex refineries to make room for all the large worldscale new capacity that has been installed in last upgrade cycle – most designed to export products at time when demand has collapsed and may not return……especially on gasoline based production that has now shifted back towards diesel economies that often limit crude processing for exporters.
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