Japanese oil companies begin shift to chemical sector

Japan’s oil companies are increasingly veering away from their core refining businesses and are focusing on the more promising chemical sector. With the continuous decline in domestic demand for oil products like gasoline, oil companies like Idemitsu Kosan Co., JX Nippon Oil & Energy Corp. and Cosmo Oil Co., are planning to take advantage of the rapidly growing demand for petrochemical products in Asia. But with new players emerging from other areas of Asia and the Middle East, these Japanese firms are facing stiff competition. At the forefront of this trend are the oil refining unit of JX Holdings Co. and Idemitsu Kosan Co., which are both expanding their basic and functional chemical operations. In 2011, JX Nippon Oil & Energy built a joint-venture paraxylene plant in South Korea with a local company. Idemitsu Kosan recently decided to suspend crude oil processing operations at its refinery in Shunan, Yamaguchi Prefecture, but it will continue to maintain its ethylene facilities at the same Tokuyama compound in Shunan. Although lagging a bit behind, Cosmo Oil Co. began using new equipment at its refinery in Yokkaichi, Mie Prefecture, to produce mix-xylene, which could be used a raw material for paraxlyene. Its joint venture with a local partner in South Korea is scheduled to go online in 2013, which will pave the way for more expansion into the petrochemical products market in Asia. (February 2, 2012)