Fuji Oil may consider entering into alliances with other companies in the Japanese refining and petrochemical sector, where it can benefit, a senior company official with the Japanese refiner said.
"We are not able to speak about anything specific at the moment," Hiroaki Morita, director and executive managing officer said in an interview with Platts Tuesday.
"Our thinking is that we will seek an alliance with other companies if we can see a scheme that will help boost our competitiveness by cutting costs," Morita said.
Morita said that Fuji Oil could consider such an alliance with refiners or petrochemical companies which have plants in Chiba, Tokyo Bay, but he did not rule out other areas outside the refining and petrochemical complex in Tokyo Bay if there were benefits.
Fuji Oil operates the 143,000 b/d Sodegaura refinery at Chiba.
Fuji Oil's possible alliances could come at a time when a number of Japanese refiners are weighing alliances in refining and oil products supply systems to optimize their operations further in the face of diminishing domestic demand.
At Chiba alone, refiners Cosmo Oil, TonenGeneral and Mitsui Oil are jointly pursuing ways to optimize refining operations at two refineries in the Keiyo Rinkai Industrial Zone under a memorandum of understanding signed on September 30.
Among areas of possible cooperation, the three companies will consider building a pipeline between Cosmo Oil's 240,000 b/d Chiba refinery and the nearby 175,000 b/d Ichihara refinery in Chiba, equally owned by TonenGeneral and Mitsui Oil under their joint venture Kyokuto Petroleum Industries to increase efficiency.
Fuji Oil's Sodegaura refinery is adjacent to Sumitomo Chemical's Chiba Works. It is also close to Idemitsu Kosan's 220,000 b/d Chiba refinery. In 2010, Idemitsu and Mitsui Chemicals integrated their steam cracker operations in Chiba under a 50:50 joint operating unit.
Sumitomo Chemical has a 6.46% stake in Fuji Oil, whose major shareholders include Tokyo Electric Power Company (8.74%), Fidelity (7.73%), Kuwait Petroleum Corp. (7.43%), the Saudi Arabian government (7.43%), Showa Shell (6.57%), and Nippon Yusen Kabushiki Kaisha (3.51%).
EYING REFINERY RUNS OF OVER 90%
Meanwhile, Fuji Oil intends to maintain its refinery utilization rate at a "high rate" of "more than 90%" over its topping capacity basis over the next three fiscal years to March 2017, Morita said.
Fuji Oil will be able to maintain high run rates -- except for years when it has a major, four-yearly refinery turnaround at the refinery -- because it can easily switch to exporting oil products whenever it faces sluggish domestic demand, Morita said.
Currently, Fuji Oil has shipment functions, allowing the refiner to export more than 3 million kiloliters/year (52,000 b/d) of gasoline, jet fuel and gasoil, he said.
This export capacity is part of its capability to produce around 5.2 million kiloliters/year (90,000 b/d) of gasoline and middle distillates, he added.
Morita said Fuji Oil's export volumes would depend on the market situation because it exports on a spot basis. Its oil product exports could be influenced by such factors as demand for low sulfur fuel oil for power generation from Tepco, he said.
"Hiking our production of LSFO means, we are cutting output of gasoline or gasoil," said Morita, adding that such shifts in production could affect export volumes.
In Japan, Fuji Oil supplies products to Showa Shell and JX Nippon Oil & Energy, said Morita, declining to give further details. But he added that the company also supplies jet fuel to Japan Airlines mainly at Haneda Airport in Tokyo.
Among its advanced secondary units at the Sodegaura refinery, Fuji Oil can process ultra heavy crudes with a 30,000 b/d vacuum residue thermal cracking unit.
Fuji Oil has been processing heavy grades including Napo from Ecuador on a spot basis, whenever the economics make sense, Morita said. In the fiscal year ended March 31, Fuji Oil bought around 600,000 kiloliters of Napo crude, and the company bought 200,000 kiloliters of the grade over April-September.
Over the next three fiscal years, Fuji Oil will consider whether to build a boiler turbine generator, using petroleum pitch at the Sodegaura refinery to cut its cost of electricity -- it is buying slightly less than 40% of its needs currently, Morita said.
Once Fuji Oil decides to move ahead to install the BTG, it expects to be almost self-sufficient in electricity, he said.
Fuji Oil could install the BTG at the Sodegaura refinery as early as in fiscal 2017-18 during its next major refinery turnaround, he added.
During its last major refinery turnaround over May 13-June 16, Fuji Oil hiked the nameplate capacity of its 245,000 mt/year mixed xylene unit by around 10%, said a company official, adding that the company had yet to report its new capacity. Fuji Oil also has a 175,000 mt/year benzene unit at the Sodegaura refinery.
