|
Idemitsu may expand Vietnam Nghi Son refinery project
Idemitsu Kosan Co., Japan’s second-biggest refiner, may expand a US$5.8 billion project in Vietnam as declining domestic demand forces it to seek alliances with rivals and shed capacity at home, the new president said.
The company is in talks to buy land adjacent to the Nghi Son refinery, Kazuhisa Nakano, 61, said in an interview in Tokyo Friday. He declined to give the cost or size of the proposed expansion of the 200,000 barrel-a-day plant, of which Idemitsu owns 35.1 percent.
Idemitsu is the first Japanese refiner to build a refinery overseas to tap a projected increase in consumption in Asia’s developing economies. Nippon Oil Corp. is also considering building a refinery in Vietnam with Korea’s SK Energy Co., Chairman Fumiaki Watari said last week.
“We can expect growth from countries in Indochina such as Laos and Cambodia for the next two or three decades, and this will compensate for declines in Japan demand,” said Nakano, who succeeded Akihiko Tembo, who became chairman in June. Idemitsu has estimated Vietnam’s fuel demand will double to 600,000 barrels a day by 2020.
Japan’s refining capacity exceeds usage by about 1 million barrels a day, or 20 percent and demand is likely to contract at a rate of 6 or 7 percent a year, Nakano said. Idemitsu will seek alliances with other companies to combine operations and shed capacity in coming years, he said.
Mitsui alliance
Idemitsu is now studying plans to combine a 220,000 barrel-a-day refinery in Chiba near Tokyo with a petrochemical plant run by Mitsui Chemicals Inc. nearby. Idemitsu provides naphtha to Mitsui’s petrochemical plant, which yields 553,000 metric tons a year of ethylene, a feedstock for fibers and plastics.
The alliance with Mitsui, which is also a partner in the Vietnam refinery, may be expanded to its 120,000 Tokuyama refinery in western Japan, where Mitsui has a nearby petrochemical plant, Nakano said.
“By forming an alliance with others who have nearby refinery or chemical plants, we and partners can consider cutting capacity together,” he said.
Shares in Idemitsu have advanced 37 percent this year, outpacing the 18 percent gain in the 11-member Topix Oil and Coal Index. They slipped 0.4 percent to close at 7,780 yen in Tokyo Friday.
In addition to the Vietnam plant, Idemitsu is considering an expansion of the 146,000 barrel-a-day Ras Laffan refinery in Qatar, in which it holds a 10 percent stake, Nakano said. Ras Laffan processes condensate, a type of light oil, for export to growing Asian markets. Commercial output will start in August or September, about one month behind schedule, he said.
Growing demand
Developing economies such as China are expected to boost worldwide oil consumption next year by 1.4 million barrels a day, or 1.7 percent, according to the International Energy Agency. By contrast, oil product sales in Japan has declined for 13 straight months, and consumption may fall 3.5 percent annually in the five years ending March 2014, according to the trade ministry.
Idemitsu, which scrapped an 80,000 barrel-a-day plant and a 110,000 barrel-a-day plant in 2003, has no immediate plans to close more refineries. The company owns four plants in Japan with combined capacity of 640,000 barrels a day.
Commercial operations at the Nghi Son refinery are due to start in December 2013. Kuwait Petroleum International Ltd. holds 35.1 percent, while state-controlled Vietnam Oil & Gas Corp. holds 25.1 percent and Mitsui holds 4.7 percent.
thanhnien, bloomberg
|
