TOKYO: Japanese oil companies are increasing exports of petroleum products to Asia, hoping to offset sluggish domestic demand by cultivating customers in countries such as Singapore where demand is growing. Idemitsu Kosan exported 400,000 kiloliters of gasoline in the first three months of 2016, triple the amount from the year-ago period. The company said solid market conditions and rising demand due to low oil prices have prompted an increase in shipments to the Pacific Rim, especially Asia.
JX Nippon Oil & Energy expects to export 900,000kl of petroleum products in April, 90% more than a year earlier. Its exports have climbed year over year since December. The JX Holdings unit said inquiries for diesel have been strong, in part because of refinery closings in Australia.
Japan’s gasoline and diesel exports in 2015 totaled around 13 million kiloliters, up 20% from 2014 and the most in five years. Gasoline exports in February roughly doubled from the year-earlier period to 680,000kl. The leading destination for gasoline from Japan is Singapore, followed by Australia, Indonesia and the U.S. Australia and Hong Kong are the top export destinations for diesel. Exports in 2016 are expected to match or surpass 2015 totals.
Japan’s oil companies hope that increasing exports will tighten supply-demand conditions at home. Despite improved efficiency resulting from integrating management, a sense of oversupply lingers at domestic refineries. Yasushi Kimura, president of the Petroleum Association of Japan and chairman of JX Holdings, said “it is difficult to adjust supply and demand only domestically.”
Idemitsu’s strategy is to increase exports if excess supplies develop domestically. These oil companies seek to boost earnings by expanding exports when refining margins are widening. The margin on gasoline shipped to Asia was at the high level of around $20 a barrel in 2015.
