Page 5 - AsianOil Week 32

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