Japan refiners are ramping up crude oil importation from Nigeria, highlighting the short-term challenges of replacing their Middle Eastern crude supply, cut by the Iran war.
Refinery runs stood at 67.8% of the designed capacity for the week to April 11, in line with 67.7% in the previous week and well below the levels of more than 80% seen before the start of the war in late February, Reuters quoted the Petroleum Association of Japan data on Wednesday.
The outlook for next month may be better, as the country has released oil from its national stockpile and managed to secure substitutes for over half the volume it imported last May via the Strait of Hormuz, officials have said. Overall, Middle Eastern crudes normally make up 95% of Japan’s imports.
However, Japanese refineries have limitations on the volume of other crudes they can run, as their plants are designed to process mainly medium-sour Middle Eastern crude.
Apart from Nigeria, other countries such as Malaysia, Azerbaijan, Brazil, and Angola will also benefit from the new imports.
“Japan could likely push non-Middle East crude to around 30-50% of its slate in the short term. But fully replacing Middle Eastern supply is difficult,” the report quoted Nithin Prakash, an analyst with Rystad Energy.
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👉 JOIN GISTSMATE WHATSAPP CHANNELThe refiners can mix the Middle Eastern crudes with light-sweet crude from the U.S. and West Africa, along with some medium grades from the Caspian region and parts of Latin America, Prakash said, adding that the shift would increase yields of gasoline and naphtha and reduce diesel and jet output.
PAJ has suspended publication of Japan’s petroleum product stocks, citing the change in supply structure.
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