The current gasoline supply shortage and shutdown of 1.45-mil bbl of refining capacity in Japan would not likely trigger a large amount of imports in the short term; however, in a long run, the country may consume more fossil fuel to generate power amid safety concerns on nuclear power plants, C1's research found.
Japan had so far shut about 30% of refining capacity out of safety concerns or due to energy supply factors, C1 reported earlier. Thanks to no severe damages, those refineries except Cosmo's Chiba refinery are expected to resume operations soon amid re-construction, according to some Japanese researchers.
Oil product supply tightness in Japan is expected to be eased in the near term, as Japan had excessive refining capacity and its inventory could meet 70-day demand, the sources believed. The country is more likely to reduce oil product exports.
As for naphtha and ethylene sectors, Japan may show less demand for naphtha, because power outages would affect operations of ethylene plants; however, ethylene demand might drop more steeply, according to sources with refiners in Japan and the Middle East. Japanese ethylene producers may consider exporting part of ethylene or renting storages.
Japan might purchase much more fossil fuel for power generating purpose amid re-construction and recovery of economy, with Fukushima- Daiichi and Fukushima-Daiini nuclear plants closed. The two power plants had a combined capacity of 9.1-mil kw.
Japan is estimated to consume 0.5-1-mil mt more LNG, 400,000-600,000mt more fuel oil or crude and 100,000-200,000mt of power coal monthly in a long period. The demand might be higher with the nation's reevaluation on its nuclear power plants going on.
