Japanese refiners to resume normal operations post typhoon Hagibis

Japanese refineries are widely expected to resume normal operations after briefly suspending their production and supply chains over the weekend, with typhoon Hagibis inflicting minimal damage to the country’s primary and secondary refining units, industry and market sources with knowledge of the matter said Monday.

Typhoon Hagibis made landfall southwest of Tokyo at around 7 pm local time Saturday, unleashing heavy rainfalls and gusts of winds across the eastern part of the country before moving away from the country’s mainland Sunday morning.

Japan’s major refiners, including JXTG Nippon Oil & Energy, Fuji Oil and Cosmo Oil, were quick to launch damage assessments Sunday, but the companies have reported no major operational disruptions so far.

Fuji Oil, in which Idemitsu Kosan holds a 6.57% stake, will likely see its sole 143,000 b/d Sodegaura refinery in Tokyo Bay undergo normal operations this week, trading sources at the refiner with knowledge of the matter told S&P Global Platts.

“There were no serious incidents like explosions or flash flood damages to refinery units … minor checkups and clean up works may be required, but nothing too serious for now,” one of the company sources said.

The country’s largest refiner JXTG Nippon Oil & Energy also reported no significant damage to its refineries so far, with only some minor maintenance works expected to take place within the next few days due to the recent heavy rainfall.

JXTG shut part of unidentified units at its 270,000 b/d Negishi refinery in Tokyo Bay as the facilities were soaked in rain water, according to a statement released Sunday by the Ministry of Economy, Trade and Industry.

The refiner had briefly suspended crude and oil products shipping operations over the weekend, but all transport and logistics flows will likely recover Monday, according to the latest METI statement.

METI also indicated that Japan’s entire LPG storage facilities have not been damaged by the weekend typhoon.

Japan’s second largest refiner Idemitsu Kosan and Cosmo Oil could not be immediately reached for comment on their overall refining operations, but several trading sources at the two refiners based in Singapore said the companies have no major production and trading disruptions to report so far.

“The typhoon came and went pretty quickly … Japan typically faces 10 to 20 big typhoons on average per year so buildings and industrial complexes are designed well to withstand strong winds and earthquakes,” a crude and condensate marketing source at a Japanese integrated trading firm based in Singapore said.

OCTOBER DIESEL DEMAND

With multiple landslides and flooding damaging some of the major roads and bridges in more than 10 different prefectures across the country, the month of October could post a sharp decline in Japan’s auto fuel demand as consumer vehicle usage would be limited, Asian refined product traders said.

State-owned international broadcaster NHK World reported Monday, citing Japan’s Land and Transport Ministry officials, the government had confirmed the collapse of levees at 10 locations on nine rivers, due to heavy rains brought by Typhoon Hagibis.

Many roads along the Chikuma River in Nagano Prefecture, northwest of Tokyo are completely submerged with muddy water, the Ministry said.

However, Japanese oil products trade sources said any sharp downturn in domestic auto fuel consumption and refinery output would be limited as post-flood repair and construction works would support diesel demand going forward.

“Average consumer demand will probably fall this month due to road damages and closures, but the repair works would also propel auto fuels demand so the refiners would have little reason to cut down on diesel and gasoline production,” a middle distillates trading source at Idemitsu Kosan, who declined to be named, said.

Japanese refiners produced 5.97 million barrels of gasoline and 4.86 million barrels of gasoil during the week of September 29-October 5, up 22.7% and 18.9%, respectively, from a week earlier, according to latest data from Petroleum Association of Japan.

Meanwhile, Japan’s total refined oil product stocks stood at 66.85 million barrels as of October 5, up 1.6% from 65.80 million barrels in the week ago, the PAJ data showed. Middle distillate stocks inched 0.2% higher week on week to 34.77 million barrels on October 5.

PAJ will next release its weekly petroleum statistics on Thursday October 17.
Source: Platts