(Adds details, background)
By Osamu Tsukimori
TOKYO, Sept 5 (Reuters) - Idemitsu Kosan Co, Japan's No. 3 oil refiner, will cut fourth-quarter crude refining by 14 percent and sealed its first term export deal in over four years to make up for falling fuel demand in the world's third-largest consumer.
Idemitsu (5019.T: Quote, Profile, Research, Stock Buzz), which has four refineries with total crude processing capacity of 640,000 barrels per day (bpd), expects domestic demand to fall more quickly, forcing it to seek overseas outlets for its oil products.
Hit by high oil prices, the company said on Friday it planned to refine 7.5 million kilolitres (513,000 barrels per day) of crude during October-December, down 1.2 million kl from the year-earlier period.
Officials said the lower production reflects the recent 10 percent decline in the company's domestic gasoline sales, in addition to relatively slack demand for other products, such as diesel for trucks and buses, and kerosene.
The reduction of 14 percent is steeper than the 13 percent recorded in April-September 2004, when its Hokkaido refinery in northern Japan was shut due to an earthquake-related fire, company officials said.
The maintenance shutdown of the company's 120,000-bpd crude distillation unit (CDU) at its Tokuyama refinery scheduled for early-October to mid-November would reduce crude processing volumes by about 1 million kl.
On top of that, 200,000 kl worth of run cuts would be conducted mainly at its 160,000-bpd Aichi refinery.
"To keep oil product inventories at an optimal level, we would match production with demand," Ichiro Matsuo, senior manager of Idemitsu's supply planning and coordination section, told reporters.
The company also said it expected to refine 5.6 million kl of crude during August-September, down 5 percent or 300,000 kl from a year earlier, due in part to a slight problem at its Hokkaido refinery and slow oil demand.
That marked the first run cuts since February, when it reduced runs by around 3 percent.
Poor domestic demand has also hit Japan's top oil refiner Nippon Oil Corp (5001.T: Quote, Profile, Research, Stock Buzz), which late last month planned to refine 3 percent less crude this month, compared to a year earlier.
FIRST TERM EXPORT DEAL WITH MEXICO
Idemitsu said it had signed its first contract with the trading arm of Mexico's state oil monopoly Pemex, PMI Trading Ltd., to export 200,000 kl a year (3,446 bpd) of diesel, to meet the Central American nation's growing demand for oil products.
The contract is Idemitsu's first term oil product export contract with any nation since the number of its refineries shrank to four in 2004, as domestic demand peaked. The contract is not up for automatic renewal after the first year.
Idemitsu said it was also considering exporting diesel (gas oil) on a spot basis.
"In addition to gas oil, we will also study the possibility of exporting gasoline to Mexico, as well as consider the possibility of actively expanding exports to other regions," Idemitsu said in a statement.
It said Idemitsu plans to export about 1.5 million kl of oil products in the year to end March next year, up 500,000 kl from the previous year.
Pemex is the world's No. 6 oil producer and a top supplier of crude oil to the United States. (Reporting by Osamu Tsukimori and Miho Yoshikawa; Editing by Ramthan Hussain)
Posts
No comments:
Post a Comment