Since 1996 Japanese demand for oil products has dropped. This drop has been fuelled by developments in alternative fuels and the drive to cut carbon emissions. The Ministry of Industry and Trade has also reported that for the next 5 years Japanese demand for oil products will drop by an average of 3.5% every year. As a result, Nippon Oil have decided to invest in an over seas project.
Plans in Asia
Nippon Oil plan on joining forces with South Korea’s SK Energy Co. to construct a 300,000 bpd facility in Vietnam. Nippon Oil sees this as a sensible venture as Japan’s demand is decreasing and Asia’s demand is increasing continuously due to its quickly developing economy.
The new plant will cut 400,000 bpd from Nippon’s domestic production, helping shrink the ever increasing gap between Japanese domestic supply and demand. Nippon also intends to increase its output of renewable energy options and cut capacity of its established refineries by 50%.
Oil in Vietnam
The construction of the refinery in Vietnam will be included in the 20 year accord held between Nippon Oil and SK Holdings Co. The companies formed a partnership in 2007 to join forces against rival refining companies in China and India. Vietnam is heavily import reliant and was exclusively so until February of this year when the Dung Quat Bay refinery opened. This facility produces 148,000 bpd and meets approximately a third of the countries demand for refined products. Nippon Oil’s new venture is one of seven refining complexes planned for construction in Vietnam with a predicted total output of 70 million tpy.
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