By TSUYOSHI INAJIMA and YUJI OKADA
Idemitsu Kosan Co., Japans third-biggest refiner, is
looking to lease fuel-storage tanks in Singapore as it
expands its trading business in Asias oil hub.
The Tokyo-based refiner plans to use the storage to blend and
supply gasoline to Australia and other countries in the
region, Kiyoshi Homma, the general manager of the integrated
supply and trading department, said in an interview. Traders
and refiners lease or own facilities
in Singapore to import,
mix and trade products including diesel, jet fuel and ship
The city-state has about 70 million bbl of commercial storage
capacity, according to Alex Yap, a Singapore-based analyst at
FGE, an energy consultant.
Japans exports of oil products rose 21% in the year
ended March 31 as refiners seek new markets amid declining
consumption at home. Gasoline demand will fall 2% a year on
average through fiscal 2018 because of a shrinking population
and improved energy efficiency, according to the Ministry of
Economy, Trade and Economy.
Japans demand for gasoline is expected to
considerably drop in coming years, Homma said.
There will be more oil products overflowing from the US
and Middle East into Asia, the worlds stomach for oil,
where supplies can be always absorbed.
Idemitsu acquired Freedom Energy Holdings, an Australian
petroleum products distributor, in December 2012. The
company, based in Brisbane, Queensland, sells diesel and
gasoline wholesale and operates about 40 retail stations in
the country, Idemitsu said at that time.
Idemitsu and its partners including Kuwait Petroleum
International are also developing a $9 billion refinery project
in Vietnam. The Nghi Son
plant in Thanh Hoa province, with a capacity of 200,000 bpd,
is scheduled to start commercial operations in 2017.
These supply and distribution assets will help maximize
profits by bringing products from countries where prices are
the lowest to where they are higher, Homma said.
Idemitsu is also interested in sourcing feedstock
from the US, where
production has increased. New technologies including
horizontal drilling and hydraulic fracturing have unlocked
reserves trapped in shale deposits.
Global oil flow is rapidly changing as the US
ships overseas larger amounts of oil products amid the shale
boom, Homma said. There are signs that the nations
four-decade ban on crude and unrefined feedstock
exports is easing.
Pioneer Natural Resources and Enterprise Products said last
month that the Commerce Department approved their plans to
export some ultra-light crude, known as condensate, after it
undergoes a stabilizing process that includes a distillation
tower. The US could
export as much as 300,000 bpd of condensate by year-end,
Citigroup said in a report on June 25.
Idemitsu has been approached by a company selling the feedstock
sourced from the US,
Homma said, declining to provide further details.
We do have an interest in condensate from the US,
Homma said. With producers taking major profits we
wouldnt be able to buy it cheap, Homma said.