Japan's oil industry sector explores new options

Government and private sector groups in Japan with stakes in the petroleum industry are preparing for the lifting of the Sophisticated Methods of Energy Supply Structures law, which was enacted in 2009 in response to the decline in domestic demand for fuel oil after peaking in 1999. Under the law, the government required oil refiners to reduce their refining capacities until March 2014 to correct the gross imbalance between production and domestic demand. In preparation for the lifting of the law, Zensekiren, or the Federation of Petroleum Product Dealers, sent a team to South Korea to study how the Japanese market will be affected by Korea’s plan to build an oil hub for Northeast Asia. Korea’s hub will distribute petroleum products to neighboring countries like Japan, Taiwan and China. Japan thinks it is likely to be regarded by Korea as a promising export market. Zensekiren also visited Singapore, to get a clear picture of the petroleum-products market in the region. Since Singapore already has an established Asian oil hub, the federation is looking at the possibility of exporting Japan’s high-quality petroleum products such as low-sulfur diesel fuel to Singapore. (March 15, 2012)