TOKYO (Nikkei) -- Japan's five leading oil refiners have put plans in place to reduce their capacity by just over 20% in order to comply with a government regulation effectively requiring them to do so by March 31 next year, The Nikkei reported in its Thursday morning edition.
Top refiner JX Nippon Oil & Energy Corp. and the other firms will lower their combined capacity by nearly 1.1 million bpd from pre-regulation levels.
Domestic demand for such fuels as gasoline and diesel is now estimated at around 3.4 million bpd. The overall refining capacity in Japan is expected to drop from the pre-regulation 4.8 million bbl to 3.7 million bbl, tightening the supply-demand balance and improving earnings at oil companies.
No. 2 refiner TonenGeneral will cut its daily capacity 16%, from 661,000 bbl to just under 560,000 bbl. The firm will shut down two of its six crude processing units, one each at its Kawasaki and Wakayama refineries. It will continue operations at those locations as well as at its third site, the Sakai refinery, maintaining employment and supply to clients.
Domestic demand for gasoline has been falling since 2004 on such factors as the adoption of environmentally friendly vehicles.
Dow Jones Newswires