By TSUYOSHI INAJIMA and EMI URABE
JX Nippon Oil & Energy Corp., Japans largest oil
refiner, is considering shrinking its presence at home and
expanding elsewhere in Asia as the government squeezes the
industry in the face of declining domestic fuel demand.
The company is targeting Indonesia and Vietnam as the
countries welcome foreign investments along the fuel supply
chain, from refining to distribution to retail sales, Tsutomu
Sugimori, the president of the company, said in an interview.
JX Energy would seek partners for any expansion
abroad, he said.
Japanese refiners are moving away from their traditional
businesses of refining
crude oil into products
for domestic use as the countrys fuel demand slides.
The industry has shuttered 26% of its capacity since 2000 and
may have to cut about 10% more within three years to meet the
government rules meant to improve efficiency and spur
We have to build new business pillars, Sugimori
said in the July 2 interview. We may diversify our
domestic energy business or tap into oil refining
and retailing business
abroad. We will consider whether we can do both or only one
The company is turning its focus at home to power generation,
said Sugimori, who became president on June 26. JX plans to
nearly triple its capacity to 4 gigawatts by 2030, from 1.4
gigawatts now, he said.
JX Energy is among companies seeking to form a partnership
with Tokyo Electric Power Co., Japans biggest power
utility, to cooperate on thermal power. Sugimori declined to
comment on what JX Energy has proposed to Tokyo Electric.
The company and its domestic refining competitors face a
difficult choice after the Ministry of Economy, Trade and
Industry earlier this week proposed new efficiency targets to
be met by March 2017.
JX Energy may reduce its refining
capacity by about 10% to
meet the target proposed by the ministry, which oversees the
industry, Sugimori said. The company, which owns 7
refineries, can process about 1.43 million bpd, which
accounts for 36.1% of the countrys total, according to
data compiled by the trade and industry ministry.
We want to strengthen refineries with potential and
enable them to run neck and neck with companies in South
Korea and other countries, Sugimori said. We are
considering shutting or merging those that we cannot
JX Energy is building a solvent de-asphalting unit at its
, which will provide feedstock
for a 100-megawatt power
generation unit at a neighboring plant, Sugimori said. The
company is also considering doubling capacity of its
840-megawatt Kawasaki natural gas fired facility, jointly
owned by JX and Tokyo Gas Co., Sugimori said.