TOKYO: Japan’s biggest oil refiner JX Holdings is adapting refineries to produce more gasoline for sales overseas, as Japan joins a regional bonanza driven by strong car sales and low prices and finds an outlet for its chronic refining over capacity.
JX’s main refining unit started gasoline exports this month from Mizushima-A refinery in Okayama prefecture in western Japan after converting tanks, a company official told Reuters this week. The refinery previously exported mainly the middle distillate from the plant.
JX also began exporting gasoline at its Kashima refinery northwest of Tokyo from January, to take advantage of margins that are better than those for the domestic market, after reconfiguring units, the official said. China and Australia are the main markets for JX’s exports, he added. “With the decline in U.S. gasoline stockpiles, the gasoline market has been heading higher since February and we plan to keeping exporting,” he said.
“With the imminent start of peak demand season nearing, along with the refinery maintenance period, supplies are set to tighten, so we expect the gasoline export market to continue to improve,” he said declining to be specific on margins or gasoline refining capacity increases.
Japan’s gasoline exports hit a record 148,401 barrels per day (bpd) in February, more than double the daily average last year, according to the latest trade ministry data. JX said late last month it expects its oil product exports to surge 91 percent from a year ago to a record high of 188,694 bpd this month.
Japan refining sector is in the throes of the biggest shakeup in its history as collapsing oil demand pushes the country’s five biggest players into mergers and expansion overseas. Exports are giving the refiners some relief as domestic sales collapse as the population declines and opts for more fuel efficient vehicles, pushing them into mergers.
Domestic oil product sales decline 1.6 percent last year to 3.14 million bpd, according to official data and the ministry recently projected that oil demand outside power generation would drop 1.7 percent per year on average through March 2021. China and Taiwan are also ramping up gasoline exports. Strong car sales in Asia are driving exports for China, where so-called teapot refineries started exports this year, while Taiwan’s gasoline exports were up more than 30 percent in February.
The following table provides a country breakdown for Japan’s gasoline exports in 2015, with percentage change over the previous year and share, based on trade data from the Ministry of Finance. Units are in barrels. The figures include gasoline for industrial use, such as for making paint.
