October 6, 2010 / 6:36 AM / 9 years ago

UPDATE 2-Japan's JX considers closing Negishi refinery-media

* JX says nothing decided about refinery closure

* JX eyes cuts of 200,000 bpd capacity by 2014 (Adds comment, details)

TOKYO, Oct 6 (Reuters) - Japan’s top oil refiner JX Holdings Inc (5020.T) is considering closing its Negishi refinery by the business year 2020/21 due to difficulty maintaining profits amid slowing domestic oil demand, the Yomiuri newspaper said on Wednesday.

JX has already said that the crude refining capacity at the Yokohama-based refinery near Tokyo will fall to 270,000 barrels per day after it scraps a 70,000 bpd No.2 crude distillation unit at the end of this month.

Overall, JX plans to complete a reduction of 400,000 bpd in crude refining capacity by the end of this month in the face of declines in domestic oil demand and cut an additional 200,000 bpd by March 2014. By 2020, it plans to cut refining capacity to 1 million bpd.

The Yomiuri reported that JX was considering gradually closing the Negishi refinery in stages as well as cutting back operations at other refineries. The company is likely to consider transferring the refinery’s employees to other domestic facilities, the report added.

A closure of the Negishi refinery would leave the Kashima refinery, northeast of Tokyo, as the only refinery in the greater Tokyo region.

Some industry sources said the closure of the Negishi refinery was seen as unlikely.

“It is hard to believe,” said one source who declined to be identified. “If it were other refineries, that would have made sense because demand there is smaller.”

Japan’s refiners are shutting plants to help trim the country’s surplus refining capacity, estimated around 20 percent, or over 1 million bpd.

In response to the Yomiuri report, a spokesman for downstream oil unit JX Nippon Oil & Energy Corp said nothing has been decided.

New government regulations call for refiners to boost their ability to process heavy oil into lighter oil products by March 2014 by either building new residue cracking units or scrapping refining capacity. Industry watchers say only the latter looks feasible. [ID:nSGE67T039]

The Negishi refinery has a 40,000 bpd residue fluid catalytic cracking (RFCC) unit and an idled 20,000 bpd coker, according to a Reuters survey. [ID:nTOE66Q059] (Reporting by Osamu Tsukimori; Editing by Chris Gallagher)

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