JXTG to shut Muroran petrochem plant as Japan gasoline demand fades

TOKYO - 27 September 2017: JXTG Nippon Oil & Energy Corp, Japan’s biggest oil refiner, said on Wednesday it will shut its Muroran petrochemicals plant due to falling demand for gasoline in Japan.

Muroran mostly produces feedstock for plastics, with gasoline as a byproduct, but falling demand for gasoline due to a declining population and more efficient cars means it is running at a loss, JXTG Executive Vice President Takashi Noro said.

JXTG will halt output from Muroran in March, 2019 and convert it to a terminal for storing and shipping oil products. The company will discuss the future of about 230 staff with the plant’s union, Noro told a briefing.

Muroran was once a 180,000 barrels-a-day oil refinery that was converted to a petrochemicals complex in 2014 as Japan’s government pushed the country’s bloated refining industry into the biggest shake-up in its history.

It was owned by JX Holdings which merged with TonenGeneral Sekiyu in April to create JXTG. Two other Japanese refiners, Idemitsu Kosan Co and Showa Shell Sekiyu are also planning to merge.

In the year through March, Muroran produced 430,000 tonnes of feedstock for paraxylene, which is used to make plastics, and 160,000 tonnes of cumen, a material for making components in computers and mobile phones.

Muroran also produced about 5.3 million barrels of gasoline and nearly 2 million barrels of kerosene.

The petrochemical products are exported to Ulsan Aromatics in South Korea, which JXTG owns with SK Innovation. JXTG said it would continue to supply Ulsan with feedstock from others plants in Japan.

JXTG shares ended down 2.4 percent, while other refiners were up and the Nikkei 225 closed down 0.3 percent.