Japanese oil refiners will cut their capacity to the lowest in four decades next year to meet a government deadline, slashing the country's Middle East imports and tightening regional fuel supplies.
Imports of crude by the world's No. 3 oil consumer could fall by up to 320,000 barrels per day (bpd) -- down nearly 9 percent on last year -- with Saudi Arabia, the United Arab Emirates, Kuwait and Qatar bearing the brunt of the cuts.The contraction in one of the world's biggest oil markets adds to falling demand from the United States as shale oil output booms, and from the ailing European economy. As import demand elsewhere falls, top oil exporters are competing more intensely for the biggest growth market -- China.
The combination of a declining, ageing population and improved efficiency have cut deeply into Japan's fuel consumption. The decline in 2014 demand is almost as much as the 380,000 bpd by which China's appetite for oil is expected to grow next year.
By March 2014, Japan's total refining capacity will fall to its lowest level since 1970 or just below 4 million bpd, dropping about 1 million bpd -- or 20 percent -- from 2010, when Tokyo issued a mandate to slim down the bloated sector with falling domestic demand.
The combination of a declining, ageing population and improved efficiency have cut deeply into Japan's fuel consumption. The decline in 2014 demand is almost as much as the 380,000 bpd by which China's appetite for oil is expected to grow next year.
By March 2014, Japan's total refining capacity will fall to its lowest level since 1970 or just below 4 million bpd, dropping about 1 million bpd -- or 20 percent -- from 2010, when Tokyo issued a mandate to slim down the bloated sector with falling domestic demand.
Japan's refiners will benefit by increasing throughput at remaining facilities, but less spare capacity could lead to a growing dependence on imports of oil products such as kerosene and gas oil to meet peak seasonal demand.
Source: Reuters
