Japan Forced to Shut Oil Refineries on Dipping Petroleum Consumption

SEATTLE (Oil Monster): The Japanese refining industry has been badly impacted by reduced petroleum consumption.

Earlier in October this year, Japanese refiner ENEOS had permanently closed a 120 000 bpd refinery in western Japan. Also, Idemitsu Kosan has already announced plans to close a 120 000 bpd refinery in March 2024. These two refineries together account for almost 7% of the country’s total refinery capacity.

The country’s petroleum consumption has registered decline by around 2% per annum through 2022, compared with 1996. The U.S. Energy Information Administration (EIA) foresees 3% dip in consumption of petroleum products in Japan to 3.3 million bpd between 2023 and 2024. It must be noted that the consumption had peaked at 5.7 million bpd in 1996. The reduced consumption is partly due to its ageing and declining population.

The latest Short Term Energy Outlook released by the U.S. EIA predicts that the annual petroleum consumption level in Japan in 2024 is likely to hit the lowest level since at least 1980. Furthermore, the consumption levels are feared to decline beyond 2024, it said.

Due to their smaller size and lesser secondary processing capacity, the Japanese refineries have been unable to compete with newer refineries in the region, including those in neighbouring countries such as India, China and South Korea.