By Yuji Okada
March 3 (Bloomberg) -- Japanese oil refiners led by Nippon Oil Corp. plan to shut down more capacity during the peak spring maintenance season in 2009, lowering demand for crude oil imports from the world’s third-biggest user.
Japanese refiners will halt 1.2 million barrels a day in the second half of June, 14 percent more than a year earlier, according to a table compiled by industry group the Petroleum Association of Japan and obtained by Bloomberg News. The total represents 25% of Japan’s refining capacity.
The maintenance will lower Japan’s crude imports and may force refiners to buy more oil products to build inventories ahead of the summer driving season. The move comes after 2008 domestic gasoline sales fell 4.2 percent, the most since 1952, and as Tokyo Electric Power Co. comes closer to winning final government approval to restart the world’s biggest nuclear power plant, which has been shut since a July 2007 earthquake.
“Heavier maintenance shutdowns this year will accelerate the decline in Japan’s crude oil imports for sure,” said Hidetoshi Shioda, a Tokyo-based senior analyst at Mizuho Securities Co. “It comes on top of already falling imports that tracked weak domestic demand and the likely start-up of the Kashiwazaki Kariwa nuclear power plant.”
Japan’s crude oil imports in January dropped 19 percent to 18.7 million kiloliters, about 3.8 million barrels a day, the Ministry of Economy, Trade and Industry said in a report released on Feb. 27. Imports fell for a fourth consecutive month as the global recession damped demand for energy from factories and businesses.
Exports Collapse
Industrial users trimmed fuel use as a collapse in exports forced companies including Toyota Motor Corp. to cut production. Japan’s factory output declined a record 10 percent in January.
Crude oil in New York traded at $39.48 a barrel at 10:18 a.m. Tokyo time, down 73 percent from a record $147.27 on July 11.
Tokyo Electric got approval from the trade ministry to restart the 1,356-megawatt No. 7 reactor at the Kashiwazaki Kariwa nuclear plant on Feb. 13. It would take about 215,000 kiloliters of crude a month, or 45,000 barrels a day, to generate the amount of power the reactor can produce.
A weaker appetite for oil from Asia’s second biggest consumer and refiner by capacity may trigger an additional output cut by members of the Organization of Petroleum Exporting Countries, Shioda said.
Iran, Venezuela and Iraq said OPEC is prepared to cut production again when it meets on March 15. The group agreed Dec. 17 to reduce supplies in January by 2.2 million barrels a day from December levels. That followed pledges to remove 2 million barrels a day in the fourth quarter of last year.
Oil Product Imports
“A series of refinery turnarounds may prompt some refiners to import gasoline components such as reformate,” Shioda said. “But the amount will be limited because refiners already have sufficient product inventories.”
Nippon Oil, the country’s largest refiner, expects sales of kerosene, used for heating, will drop 30 percent in February from the same month last year, Director Masahito Nakamura told reporters on Feb. 27. Fuel oil sales to local power utilities are likely to plunge 50 percent in February, he said.
“Domestic product demand has been falling below our sales target,” Nakamura said. “That resulted in a buildup in our inventories.”
Refiners in the Northern Hemisphere typically halt refining units for maintenance and safety checks between March and July. Fuel demand is lowest after the end of winter and before the start of the summer driving season. They also shut some units in October and November before the surge in heating fuel demand during winter.
Shutdown Schedule
A Nippon Oil spokesman, who asked not to be named because of company policy, confirmed the company will shut a 115,000 barrel- a-day crude distillation unit from early March until April 1. The company also plans to shut the 180,000 barrel-a-day No. 2 CDU at the Muroran refinery and the 24,000 barrel-a-day No. 1 CDU at Oita between mid-May and mid-June, he said, declining to give specific dates.
Showa Shell Sekiyu K.K. plans to halt the 65,000 barrel-a- day No. 3 CDU at the Keihin refinery between early April and mid- May and the 135,000 barrels-a-day No. 3 CDU at the Yokkaichi refinery between late May and late June, said a spokesman who asked not to be named. He declined to provide specific dates, explaining that the schedule often changes by a few days.
Idemitsu Kosan Co. spokeswoman Makiko Iinuma said the refiner will idle the 220,000 barrel-a-day No. 2 CDU at its Chiba refinery in early April, the 140,000 barrel-a-day No. 1 CDU at the Hokkaido refinery in June, and the 160,000 barrel-a-day No. 1 CDU at the Aichi refinery in October. She declined to give more details.
Kosuke Kai, a spokesman at Exxon Mobil Corp.’s Japanese unit, TonenGeneral Sekiyu KK, wouldn’t comment on refinery maintenance, citing company policy.
The following is the table of planned shutdowns.
---------------------------------------------------------------
Company Refinery CDUs Capacity Period
(barrels/day)
---------------------------------------------------------------
Nippon Oil Group:
Nippon Oil:
Muroran No. 2 180,000 May 18-June 28
Sendai No. 1 145,000 June 15-June 17
Negishi No. 1 120,000 Oct. 3-Nov. 4
No. 2 70,000 No Turnaround
No. 4 150,000 No Turnaround
Osaka No. 1 115,000 March 10-April 1
Mizushima No. 2 110,000 Sept. 1-Sept. 25
No. 3 140,000 No Turnaround
Marifu No. 4 127,000 No Turnaround
Oita No. 1 24,000 May 15-June 6
No. 3 136,000 No Turnaround
TOTAL 1,317,000
Nihonkai Oil:
Toyama No. 1 60,000 To be
decommissioned
on March 31.
TOTAL 1,377,000
Exxon Mobil’s TonenGeneral:
Kawasaki No. 1 67,000 No Turnaround
No. 2 185,000 No Turnaround
No. 3 83,000 No Turnaround
Sakai No. 1 156,000 May 23-June 25
Wakayama No. 2 40,000 Sept. 10-Nov. 10
No. 3 130,000 No Turnaround
TOTAL 661,000
Idemitsu:
Hokkaido No. 1 140,000 June 1-July 25
Chiba No. 2 220,000 April 6-May 17
Aichi No. 1 160,000 Oct. 1-Nov. 22
Tokuyama No. 2 120,000 No Turnaround
TOTAL 640,000
Cosmo Oil:
Chiba No. 1 110,000 Sept. 11-Nov. 12
No. 2 130,000 April 25-June 20
Yokkaichi No. 5 90,000 No Turnaround
No. 6 85,000 Oct. 2-Nov. 28
Sakai No. 1 80,000 Aug. 22-Nov. 15
Sakaide No. 1 140,000 June 10-Aug. 4
TOTAL 635,000
Showa Shell Group:
Toa Oil:
Keihin No. 3 65,000 April 1-May 6
No. 5 120,000 No Turnaround
Showa:
Yokkaichi No. 2 75,000 No Turnaround
No. 3 135,000 May 23-July 21
Seibu:
Yamaguchi No. 2 120,000 No Turnaround
TOTAL 515,000
Japan Energy Group:
Japan Energy:
Mizushima No. 2 95,200 March 12-May 9
No. 3 110,000 No Turnaround
Kashima Oil:
Kashima No. 1 210,000 No Turnaround
*No. 2 60,000 Sept. 5-Oct. 14
TOTAL 475,200
*Condensate splitter.
Fuji Oil:
Sodegaura No. 1 52,000 No Turnaround
No. 2 140,000 May 6-June 20
TOTAL 192,000
Kyokuto Petroleum:
Chiba No. 1 175,000 March 8-April 11
Taiyo:
Shikoku No. 1 88,000 July 7-July 22
No. 2 32,000 June 15-July 1
TOTAL 120,000
Nansei:
Nishihara No. 1 100,000 May 11-June 2
Teiseki:
Topping Kubiki No. 1 4,724 May 22-June 6
Nov. 10-Nov. 14
---------------------------------------------------------------
GRAND TOTAL 4,894,924
---------------------------------------------------------------
(Schedule is subject to change)
To contact the reporter on this story: Yuji Okada in Tokyo at yokada6@bloomberg.net.
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