Page 5 - AsianOil Week 32
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AsianOil                                     ASIA-PACIFIC                                           AsianOil








































                         fourth straight week of negative values. While  plant will be aware of this, which explains Shell’s
                         refiners small and large are struggling against  decision to exit now rather than wait for demand
                         this backdrop, less complex facilities are facing  to recover.
                         tough choices over whether they will even stay   “We definitely see the possibility of more clo-
                         open.                                sures in Asia over the next 6-12 months,” FGE
                                                              consultant Mia Geng told Reuters this week.
                         Big and small problems               “Given the uncertainties in demand and our
                         With even large-scale refineries across the region  subdued margin outlook, it would be challeng-
                         opting for prolonged periods of maintenance or  ing for those less complex and efficient refineries
                         reduced run rates, the outlook for smaller oper-  to continue running.”
        Japan’s biggest   ators is gloomier still.              FGE is not the only consultancy projecting
                           Japan’s biggest refiner, Eneos Holdings, said  that other refiners will have to shut up shop as a
         refiner, Eneos   this week that its run rates in the second quar-  result of the global economic downturn. Wood
        Holdings, said   ter fell to 68%, their lowest level since 2010. The  Mackenzie research director Sushant Gupta has
                         refiner, formerly known as JXTG Holdings, said  warned that weaker Asian refineries, either in
       this week that its   oil product sales had plunged 21.5% year on  mature markets or with a lack of petrochemical
        run rates in the   year in the quarter, as the pandemic pulverised  integration, will struggle. He said: “We could see
                                                              closures becoming a reality in many markets.”
                         demand.
                           “The utilisation rate will likely remain near
        second quarter   the current level of around 70% later this year  What next
       fell to 68%, their   if demand for petroleum products stays flat,”  FGE’s Geng suggested that smaller facilities in
                         Eneos senior vice-president Soichiro Tanaka  Japan, Australia and New Zealand would most
       lowest level since   told a news conference on August 12.  likely be the next to shutter operations if GRMs
                           Eneos posted a JPY4.88bn ($45.7mn) net loss  did not improve.
            2010         for the quarter, owing to steep inventory losses in   This prediction makes some sense, given that
                         the wake of the oil price collapse.  the Japanese and Australian downstream mar-
                           Malaysia’s state-owned Petronas may  kets have already undergone periods of capacity
                         have launched Southeast Asia’s most sophis-  rationalisation in response to market dynamics.
                         ticated downstream complex – a 300,000  The argument for the closure of New Zealand’s
                         bpd refinery paired with a petrochemical  only refinery may be a tougher sell, however.
                         complex in Pengerang – but the operator  The island country still produces oil to feed the
                         has reportedly opted to delay the refinery’s  96,000 bpd Marsden Point refinery, with a small
                         restart from September until early 2021 fol-  minority of domestic oil product consumption
                         lowing a fire at the facility.       met through imports from Singapore and South
                           Even when demand does regain some  Korea.
                         momentum, it will not be the smaller players   Regardless, given that smaller refineries were
                         that benefit first. Mega-refineries with the econ-  already under pressure before the advent of the
                         omies of scale to survive at compressed margins  COVID-19 pandemic, it can be safe to assume
                         will be more competitive. Operators of smaller  that more closures are on the horizon.™



       Week 32   13•August•2020                 www. NEWSBASE .com                                              P5
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