By MARI IWATA
TOKYO -- Cosmo Oil Co. said Tuesday that it will permanently
close the 140,000 bpd Sakaide refinery in western Japan by July
2013 to meet a government regulation that encourages refining capacity cuts amid falling
Ministry of Economy, Trade and Industry set rules in July 2010
requiring refiners to raise residual cracking capacity to a
designated percentage of crude refining capacity, as calculated by
a formula, by March 2014.
By closing the refinery, Cosmo expects to save Y10
billion a year in costs.
The closure wouldn't affect its crude-oil purchasing volume
very much because Japan's oil demand is already weak, company
executive officer Hiroshi Kiriyama told reporters.
We don't think domestic demand will rise, Mr.
Kiriyama said, adding that exporting refined products
will likely remain difficult, as a number of new
refineries are coming online in the Middle East and Asia.
The company will have to cut additional capacity likely by
March 2014 to meet the regulation, he added.
Japanese power utilities have been using large amounts of
fossil fuels to make up for idled nuclear power capacity since
an accident at the Fukushima Daiichi nuclear power plant in
But most of the extra thermal power demand has so far been
met with liquefied natural gas, which is cleaner and relatively
less costly than oil.
Showa Shell Sekiyu KK permanently closed its 120,000 bpd
Ogimachi crude distillation unit near Tokyo on
Sept. 20, 2011.
Idemitsu Kosan Co. plans to permanently shut a 120,000 bpd
crude distillation unit at its Tokuyama refinery in western Japan in March
JX Nippon Oil & Energy Corp., Japan's largest refiner by
capacity and a unit of JX Holdings, plans to permanently shut
200,000 bpd of crude refining capacity by the deadline,
but the company hasn't decided which facility it should
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