Idemitsu Kosan Co, Japan’s third-biggest refiner, is looking to lease fuel storage tanks in Singapore as it expands its trading business in Asia’s oil hub.
The Tokyo-based refiner plans to use the storage to blend and supply gasoline to Australia and other countries in the region, Kiyoshi Homma, the general manager of the firm’s integrated supply and trading department, said in an interview on Thursday.
Traders and refiners lease or own facilities in Singapore to import, mix and trade products, including diesel, jet fuel and ship bunker.
The city-state has about 70 million barrels of commercial storage capacity, according to Alex Yap, a Singapore-based analyst at energy consultant FGE.
JAPAN’S EXPORTS UP
Japan’s exports of oil products rose 21 percent in the year ended on March 31 as refiners seek new markets amid declining consumption at home. Gasoline demand will fall 2 percent a year on average through fiscal 2018 because of a shrinking population and improved energy efficiency, according to the Japanese Ministry of Economy, Trade and Industry.
“Japan’s demand for gasoline is expected to considerably drop in coming years,” Homma said. “There will be more oil products overflowing from the US and Middle East into Asia, the world’s stomach for oil, where supplies can be always absorbed.”
Idemitsu is also interested in sourcing feedstock from the US, where production has increased.
New technologies including horizontal drilling and hydraulic fracturing have unlocked reserves trapped in shale deposits.
RAPID CHANGE
“Global oil flow is rapidly changing” as the US ships overseas larger amounts of oil products amid the shale boom, Homma said.
There are signs that the nation’s four-decade ban on crude and unrefined feedstock exports is easing.
Idemitsu has been approached by a company selling the feedstock sourced from the US, Homma said, declining to provide further details.
“We do have an interest in condensate from the US,” Homma said, adding that with producers taking major profits “we wouldn’t be able to buy it cheap.”
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