TOKYO: The Japanese government is closely monitoring a possible lifting of restrictions on US crude exports as the local oil industry analyzes US grades, a Japanese government source told Platts Tuesday.
“A number of [Japanese] refiners are interested,” the government source said. “The industry is in the phase of [US crude] analysis, which includes trial purchases,” the source said, adding that the refiners were looking to see whether US crudes would fit at their refineries.
The government source’s comments come after Japanese refiner Cosmo Oil said last week it had been analyzing some US crudes at its laboratory in case the US relaxes its export restrictions. Cosmo Oil has concluded that it may be able to process WTI and Light Louisiana Sweet crudes at its refineries, following its laboratory analysis of the US grades, according to company sources.
In October 2014, Cosmo Oil became the first Japanese refiner to import US shale condensate when it took a 300,000-barrel cargo at its Yokkaichi refinery in central Japan. Platts data show LLS and WTI delivered to Japan, which is heavily reliant on crude supplies from the Middle East, would typically command a slight premium to Saudi Arab Light.
LLS and WTI are highly sought after in the US market for their high gasoline yield, and increasingly, their comparably high distillate yield. For example, both crudes yield a higher percentage of gasoline and ULSD than Arab Light in a US Gulf Coast cracking or coking setup, according to Turner, Mason & Co yield formulas.
