New Market Report: Japan Oil & Gas Report Q3 2014

BMI View: Japan's refiners took a hit in Q1 2014 as new legislation intended to streamline the refining sector saw around 400,000 barrels per day ( b/d ) of capacity taken offline. We expect weak refined product demand to continue offering limited future prospects for the sector. I mport s of oil and LNG increased as a result of nuclear power generation losses in the wake of the 2011 earthquake and tsunami. We expect the first nuclear power plants to return to the Japanese grid later in 2014, reducing the need for fossil fuel imports. That said, we expect LNG demand to remain high as a significant amount of nuclear capacity will remain offline .

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The main trends and developments we highlight for Japan's oil and gas sector are:

* Japan's refining sector has taken a hit with the introduction of the new law stipulating an increased ratio of heavy residue cracking. The law, which entered into force on March 31 2014, saw the net shutdown of over 400,000 barrels per day (b/d) of distillation capacity. This will cut Japan's refining capacity to 3.94mn b/d, down over 1mn b/d from the early 2000s.
* Due to the reduction in refining capacity, Japanese refiners have already begun reducing volumes on annual crude import contracts. With Iran currently remaining under sanctions, the Middle Eastern country is likely to take the brunt of reduced imports.
* Japan's theoretical oil import requirement is expected to be 4.32mn b/d in 2014, and is expected to gradually fall as domestic demand falters, and coal power generation and nuclear restarts begin to displace oil demand from the power sector. Reduced demand from refiners should also more downward pressure. By 2023 we expect net oil imports to be 4.05mn b/d.
* In April 2014, Japex announced it had begun commercial production of shale oil from an acid stimulated well at Onnagawa in the Akita Prefecture. The company is also looking to drill a horizontal well at the Fukumezawa oil field in May, where the first application...

The Japan Oil & Gas Report has been researched at source and features Business Monitor International (BMI)'s independent forecasts for Japan including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Japan Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Japanese oil and gas industry.

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