At least one Japanese refiner has begun re-selling Middle Eastern sour crudes from July in response to its unexpected refinery outage, a source close to the matter told Platts Wednesday.
The refiner is selling one or two 500,000-barrel cargoes of Qatari grade, likely to be Qatar Marine, in July after it being faced with the unexpected refinery outage, the source said.
The refiner is also looking to sell similar volumes of the Middle Eastern sour crudes from its term contract in the coming months if its refinery outage drags on, the source said.
The news of re-selling the term Middle Eastern sour grade came to light at a time when Japan is to lose a combined 645,000 b/d -- or 14% -- of its installed refining capacity on Wednesday due to refinery outages amid the country's summer oil demand season.
Ongoing refinery outages in Japan have been a key factor weighing on demand levels for some Middle Eastern sour crudes, which has in turn put pressure on differentials for the grades, trading sources said.
Middle Eastern sour crude grades, including Abu Dhabi's Murban and Qatar Marine, have particularly been affected, sources said.
"I think the Japanese shutdowns are impacting the grades they normally take, these are normally the lighter ones," a trader said.
Platts assessed Murban at a 30-cent/b discount to the OSP on Tuesday, a fall of 25 cents/b day-on-day.
"There are two things [weighing on value]: Japan and China," a trader said.
Another trader said: "There is no real urgency in the crude market, it seems adequately supplied."
Qatar Marine was assessed at a 60 cent/b discount to the OSP on Tuesday, with the grade struggling to find homes, sources said.
"It seems refinery interest is just low," another trader said.
IDEMITSU RESTARTING 220,000 B/D CHIBA CDU IN ABOUT TWO WEEKS
Meanwhile, Japanese refiner Idemitsu Kosan will soon start preparations to repair the sole 220,000 b/d crude distillation unit at its Chiba refinery after securing approvals from the local fire department and relevant authorities, a company official said Wednesday.
Idemitsu Kosan now aims to restart the CDU about two weeks from now, which would be about three weeks after the company was forced to shut the unit as a result of a fire on Thursday, the official said.
Idemitsu's probe into the incident found that a corroded naphtha pipe had caught fire at the CDU. Idemitsu Kosan now will replace the pipe as part of its repair works.
On Wednesday, JX Nippon Oil & Energy is on schedule to shut all refining units at its 205,000 b/d Mizushima-B plant in western Japan, a company official said.
JX said on July 13 that it would shut all refining units at the plant after it found that the company had violated safety regulations with regard to its LPG tanks and some of the refining units at the facility.
It remains unclear when JX Nippon Oil & Energy will be able to restart its 205,000 b/d Mizushima-B plant refining units.
Refiner Cosmo Oil has delayed the restart of the 120,000 b/d No. 2 CDU at its Chiba refinery in Tokyo Bay "indefinitely," a company official said Tuesday.
Cosmo Oil started planned maintenance at the No. 2 CDU on May 3, and was to restart the unit in mid-to-late July.
It is also unable to say when the 100,000 b/d No. 1 CDU at Chiba would restart. It was shut mid-May for scheduled maintenance of the electrical system.
Industry sources said the uncertainty over restarting the CDUs has to do with the recent asphalt leak into sea from its tank.
On June 28 Cosmo Oil reported leakage of 437 kiloliters (2,745 barrels) of asphalt from its 1,000 kl No. 505 tank at the refinery, and part of the asphalt leaked into the sea. The company stopped the leak the same day, and on July 10 it formed an investigation committee to probe the matter.
Currently, Cosmo Oil cannot restart its refining units at Chiba after scheduled maintenance as its self-approval licenses were revoked on June 30 last year for a minimum of two years in the wake of the fire at the refinery following the March 11 earthquake.
The company now needs to secure approvals from the local authorities before resuming any refinery operations.
