IEEJ: November 2009

Northeast Asia Petroleum Forum 2009

Overview ofCurrent Japanese Oil Industry
and Important Issues in NE Asia

Akihiko Tembo
President ｏｆ Petroleum Association of Japan
Chairman and Representative Director
Idemitsu Kosan Co., Ltd.
1

Outline

１．Energy Demand & Supply in Japan
２．Refining Capacity increase
in Asia Pacific – Middle East
３．Japanese Approaches
４．Final Comments“Important Issues in NE Asia”

IEEJ: November 20092

Diversify of Primary Energy Supply in Japan
 Primary energy supply diversified through the experience of 1st & 2nd oil crisis.
 Dependence to oil sharply dropped from 76% in early 70’s to 45% in 2007.
<1000Trillion J>
25,000

New Energy / Geothermal
Nuclear
Coal
Share of Oil

Hydroelectric
Natural Gas
Oil80%
75%

20,000

NuclearNatural Gas

15,000

70%
65%
60%

Coal
10,000

55%
50%
45%

5,000

Oil

40%
35%

030%

Source : Ministry of Economy, Trade & Industry, JapanIEEJ: November 20093

Trend of Petroleum Demand in Japan Japanese petroleum demand peaked out in 2003, and keep declining.
 Efficiency improvement & fuel switching in Industrial sector decrease
fuel oil demand.
(MBD)

Gasoline
Jet / Kerosene
Fuel Oil

4,500

Naphtha
Gasoil

4,000
3,500

Fuel Oil
3,000
2,500

Jet／Kerosene

2,000
1,500
1,000500

Gasoline

Source : Ministry of Economy, Trade & Industry, Japan

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

1967

1965

0

IEEJ: November 20094

Japanese Petroleum Demand Outlook Japanese petroleum demand will sharply drop 570 thousand b/d by 2013,
in line with population decrease and further improvement of energy efficiency.

Japanese Petroleum Demand and Population Growth130 (Million)

4,300

Petroleum Demand

3,8001203,300110

2,800100

2,300
1,800

Population

(MBD)

90

1,30080800300

70
1990

1995

Gasoline
Jet / Kerosene
Fuel Oil
Total Population

2000

2005

2010

2015

Naphtha
GasoilTotal Petroleum Demand
Population (Age15-64)

Source : Ministry of Economy, Trade & Industry, Japan
Ministry of Internal Affairs and Communications, JapanIEEJ: November 20095

Refinery Capacity and Throughput in Japan Japanese oil companies increased their refineries until mid 1970’s, under Japanese
government’s “Consuming Area Refining” policy .
 Surplus capacities have been causing downward pressure to domestic market price.
5.9MBD（37）4.8MBD（28）Surpluscapacity
will increase6New Refineries in Asia Pacific & Middle East

③2,635MBD①③⑥⑭②
1,361MBD⑫⑩ ⑪
1,400MBD⑬④⑤⑥④⑦<MBD>

New Refinery Plans during 2009 - 2013
Site
China(total)

2,635

India(total)

1,400
Vietnam

HuizhouFujianTianjinQinzhou
QuanzhouPengzhou
Maoming
LiaoheCaofeidian
othersJamnagar
Bina
VadinarMangalore
Bhatinda
othersDung Quat
Nghi Son⑨⑧

Yr09120909
10111112121309
1010121209
13

OthersAsia Pacific Total
Asia Pacific & Middle East Total

CDU
240
200
160
200
200
100200
240
110
200
785
580
120110116180294130200229
4,594

IranQatar

Site
EsfahanBandar Abbas
KarbalaRas Laffan 1
Ras Laffan 2
Al Shaheen

OthersMiddle East Total

Yr
1313
1309
1213

①

②
⑤

⑯
⑮

CDU
120
120
150
145
145
250
431

1,361
5,955

IEEJ: November 20097

Refining capacity increase and demand growth Oil demand in Asia Pacific & Middle East will steadily grow.
However, as huge refining capacity addition will exceed demand growth,
excess capacity will be increased by 2.3 million b/d in 2013.
 Thus, product market will be under pressure of ample supply from those
new refineries.
(MBD) 6,000
5,000Gap

4,000
3,000
2,000
1,00002009

2010

ASIA PACIFIC

2011

2012

MIDDLE EASTCDU
INCREASE

DEMANDGROWTHCDU
INCREASE

DEMANDGROWTHCDU
INCREASE

DEMANDGROWTHCDU
INCREASE

DEMANDGROWTHCDU
INCREASE

DEMANDGROWTH-1,0002013

IEEJ: November 20098Japanese Approaches
Japanese refiners are taking measures to strengthen theircompetitiveness among International market.

A) Integrated operation of Refining &Petrochemical ComplexesB) Expansion of Product exportC) Reorganization and Rationalization
D) Environmental Measures

IEEJ: November 20099A) Integrated operation of Petrochemical Complexes Japanese Refineries has started to cooperate “Over the fence”(i.e., “between companies”, or “between refineries and petrochemical sites) ,to achieve further efficiency by generating synergy with nearby plant.

Total Optimization of Refinery & Petrochemical Complexes
Refinery

CrudeOil

Further synergy
through cooperationwith other industries,
i.e. Electric/Gas company, etc

Refinery
Efficiencyby scale-up,
concentration

Petrochemical
Exchange offeedstock,components

Noble use of surplus
by-produced components

IEEJ: November 200910B) Expansion of Product Export
 Japanese refining companies expand product export from 2005,
in line with peak out of domestic oil demand.
 Product export in 2008 contribute to utilize 8% of total refining capacities.
Petroleum Product Export from Japan

MBD

400350300
250200150100500

Import Export

ExportImportExportImportExportImportExportImportExportImportExportImportExportImportExportImportExportImportFuelOilGasoilKero/JetGasoline

2000 2001 2002 2003 2004 2005 2006 2007 2008
IEEJ: November 200911C) Reorganization and Rationalization
 Realignment of domestic refineries and oil distributors was accelerated after 1996
when deregulation of Petroleum product import restriction was introduced.
 During the transition period, restructuring of refineries, storage terminals
and petrol station was carried out.

19852009

IEEJ: November 200912D) Environmental Measures

Simultaneous pursuit of Environmental protection, Energy security andEconomic growth (“3E”) should be the basic principle.

Improvement of energy efficiency, development of technology andinternational cooperation shall be key elements.

Japanese Oil Companies Actions over Climate Change
Efficient Operation
・ Improvement of Energy Efficiency(= Reduction of CO2 Emission in Refineries)

・ “Over the fence collaboration withneighbor factories

International Contribution
・ International cooperationex. Energy conservation project
New Energy project (DME, etc)
CDM project・ Efficient transport of oil products

Efficient Consumption(Ｈigh quality oil products & equipments)
・ Contribution to Transport sec.
ex. Bio-Fuel, Sulfur-free fuel・ Commercial & Residential sec.
ex. Petroleum Cogeneration System

For the Future
・ R & D on Low carbon energyex. Fuel Cell
Solar PowerWind Power, CCS
IEEJ: November 200913

Final Comments

Important Issues inNortheast Asia

IEEJ: November 200914

World Oil Demand Outlook
110

MB/D

Demand increase by Area
1990

100

2006

2020

MB/D

Petroleum Demand

110

2030

100

+21.6

90

90

80

80

70

70

60

４３％

60

50

50

40

40

30

30

+9.2

2020

10

1000

USA

EUJapan

china

India

OtherAsia

World

21.7％
23.0％
17.9％
2008

North America

OthersAfricaRussiaMiddle East
EU27
Latin America
North America
Korea
Japan
China

21.5％
ＮＥ Ａｓｉａ2030

 Global oil demand will be steadily grown toward 2030.
 Asia Pacific will be driver of global demand growth. China will account for
43% of total demand growth.
 Asian country’s crude oil import requirement will rapidly increase, while
regional crude oil production remain stable.
Source : IEA World Energy Outlook 2008、

BP Statistical Review of World Energy 2009

IEEJ: November 2009 15

Energy Efficiency
Primary Energy Consumption per GDP
20.0
18.0

17.5

16.0
14.0
12.0
10.0
8.0

7.9

7.8
6.0

WORLD:3.0

6.0
4.0

1.8

1.0

2.0

2.5

3.1

2.0

7.9

6.0

3.1

SSIAINARUNEDOINCHSIAADI
INIAASSTNDMID-EAAI
LAA
TH

KORENADAACAUSA
LISTRA27EUAUJA

PAN0.0 It is important to reduce global energy consumption by practical use oftechnology of advanced energy efficient countries.
 The method of sectoral approach is effective to improve energy-saving
measures by best practicing of technologies, with easy comparison amongindustries in each country.
Source : Ministry of Economy, Trade & Industry, JapanIEEJ: November 200916

Important issues in NE Asia
Requirement for cooperation in NE Asian countries.
Saving resources by further improving energy efficiency- Noble use of resource and reduction of environmental effect.
- Equitable measure for each country by sectoral approach.

Securing stable crude supply from producing countries- Import requirement will rapidly increase in Northeast Asia．
- Strengthening ties by technical cooperation, partnership.

Efficient use of refining capacity in Northeast Asia
- Enhancing regional product trade to meet growing demand
and utilize existing refineries.

Strengthening oversee of speculative funds to future market- Restrict the inflow of excessive speculative funds to stabilize
crude oil price.
IEEJ: November 200917

Important issues in NE Asia
 Energy issues are closely linked with regional economy.
Regional ties and cooperate solution among Northeast
Asia countries will be more efficient and required.
 It is important to encourage dialogue between key
Northeast countries to discuss the issues shared byregional oil industry.

Thank youfor your attention
Contact : report@tky.ieej.or.jp

IEEJ: November 200918