Japan partially shuts down refining capacity

Japan has shut down one million barrels per day (bpd) refining capacity temporarily out of 3.3 bpd due to turnarounds and technical issues across, this translates into shutting down 31% of the country's overall capacity.

Japan's largest refiner Eneos has shut down 35% of its oil refining capacity, shutting down four plants with a total capacity of 618,100 bpd. The company has an overall 1.7 million bpd capacity across its ten units, which accounts for over 52% of Japan's total oil refining capacity.

Eneos shut its 145,000 bpd Sendai refinery on May 28 and its 141,000 bpd Sakai plant on May 17 for turnarounds. The two refineries are expected to restart operations in mid-July and late-July, respectively.

The company was also forced to shut its 203,100 bpd Kashima refinery on May 24 and 129,000 bpd Chiba plant on May 12 because of technical problems. The restart dates of the Kashima and Chiba plants are still unknown.

Another refiner Idemitsu also shut its 190,000 bbd Chiba refinery on April 28 for a scheduled maintenance. It is expected to last around two months, said market participants. Idemitsu's 70,000 bpd Keihin refinery operated by Toa Oil has delayed resuming operations after it started a turnaround in January this year.

Fuji Oil on May 23 has halted operations at its 143,000 bpd Sodegaura plant for a turnaround, with the shutdown planned for a month.

Cosmo Oil was forced to halt the 102,000 bpd No.2 crude distillation unit at its 177,000 bpd Chiba plant on May 16 because of some technical difficulties but resumed operations on May 28.

Japanese refiners have struggled with stable refining operations as their plants are getting old. Ageing refineries cause technical issues, and firms need more time for turnarounds to avoid unexpected shutdowns. Earthquakes also trigger technical issues at old refineries in Japan.

Eneos said earlier this month in its revised mid-term strategy that it has raised its budget for refinery maintenance during April 2023-March 2026 by 30% compared to the April 2020-March 2023 fiscal years, allocating US$3 billion to lift operating rates.

Lower runs also weighed on Eneos and Cosmo's profits from fossil fuel-related businesses in the 2022-23 fiscal year. Idemitsu's refinery issues also led to negative financial impacts, the firm stated in its April-December 2022 results.