JAPAN DISASTER: Gasoil exports likely to be meagre in near term

23 March 2011 06:23  [Source: ICIS news]

SINGAPORE (ICIS)--Japan is likely to export little gasoil in the near term as about 20% of its refining capacity is still shut down following the 11 March earthquake, resulting in tight supply in Asia, C1 Energy reported on Wednesday, quoting industry sources.

Japan’s ability to export gasoil has been cut by 15-20%, a source with a Japanese research institute was quoted as saying by C1 Energy, an ICIS service in China.

Even if some refining capacity is restarted in April, Japan will still show weak interest in exporting spot gasoil in the coming three months as it needs to ensure supply for the domestic market and long-term contracts, the source added.

Japan usually exports about 200,000 barrels of gasoil per day to Australia and southeast Asia, mainly product with 10 parts per million (ppm) of sulphur content.

The country’s gasoil supply to the domestic market has not been impacted much by the shutdown of some refineries as the country used to export 30-40% of its gasoil output.

In addition, Japan’s gasoil demand was estimated to decline by about 10% after the earthquake, primarily because of weaker demand for vehicle-consumed gasoil.

However, some Japanese importers have started to source for gasoil with 10ppm of sulphur content as post-quake reconstruction will last quite a long time.

Sinopec’s Zhenhai refinery is likely to become a supplier of such fuel for Japan. Major South Korean refiners recently supplied low-sulphur gasoil to Japan, and Taiwan’s CPC is also expected to supply cargoes.

Initial reporting by Yang Dan and Yang Ruijin

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By: Tahir Ikram
+65 6780 4359

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