Idemitsu Kosan to close 120,000 BPD Yamaguchi Refinery
Idemitsu Kosan Co., Ltd. said it will acquire a majority stake in Seibu Oil Co., Ltd., following a board of directors meeting held on June 14, 2022. Seibu Oil will become a subsidiary of Idemitsu Kosan following the acquisition. The acquisition price was not disclosed for confidentiality purposes.
Following the acquisition, Idemitsu Kosan will own 10,705,561 shares of Seibu Oil or 66.9% stake, from 38%.
Seibu Oil’s Yamaguchi Refinery in the Yamaguchi Prefecture in Japan, which has a refining capacity of 120,000 barrels/day (BPD), and 435 employees, will shut down at the end of March 2024.
Seibu Oil will continue to operate the oil depot function, storage business, and solar panel power generation business, and consider developing new businesses utilizing the site of the Yamaguchi refinery. Seibu Oil will operate these businesses and Yamaguchi.
Idemitsu Kosan, which currently has a product sales contract with Seibu Oil for approximately five million kilolitres (KL)/year will consequently terminate the contract on March 31, 2024.
Domestic demand for petroleum products in Japan is expected to decline further due to structural factors such as aging and declining population, the impact of the Covid-19 pandemic, and the global trend toward decarbonisation.
According to the Petroleum Association of Japan, the country’s total refining capacity as of March 31, 2022 is 3.4 million BPD. In addition to the Yamaguchi Refinery, Idemitsu Kosan has refining assets located in Chiba (190,000 BPD), Aichi (160,000 BPD) and Hokkaido (150,000 BPD).
Idemitsu Kosan said that as a “result of comprehensive examination based on such a business environment,” it was necessary to review the manufacturing/supply system of the Group.
“With our management vision for 2030 as a ‘responsible transformant,’ we are working on technological innovation and business structure transformation toward the realisation of a carbon-neutral society while fulfilling our social mission of stable energy supply,” the company said.