Tokyo, 14 March (Argus) — As much as 1.7mn b/d of Japanese refinery capacity, or more than a third of the country's total capacity, could be currently shut in the wake of last week's earthquake and tsunami that hit the northeast of the country last week.

Most refineries around the Tokyo bay area are undamaged but have been closed for safety checks. But concerns about power shortages in the Tokyo area, because of lost nuclear power capacity, could extend the shutdowns or limit their operations.

Worst affected are JX Nippon Oil and Energy's 145,000 b/d refining complex at Sendai in Miyagi prefecture and Cosmo Oil's 200,000 b/d Chiba refinery in Tokyo bay, which are still on fire following the earthquake on 11 March.

JX's 189,000 b/d Kashima and 270,000 b/d Negishi refineries are shut for safety checks. The company, Japan's largest oil refiner by capacity, said it will increase runs at other refineries to cover the loss.

The 175,000 b/d Chiba refinery of Kyokuto Petroleum, a joint venture between Mitsui Oil and TonenGeneral, is shut for safety checks. TonenGeneral's 335,000 b/d Kawasaki refinery is also shut for safety checks but no damage has been found yet.

No contact could be made with Toa Oil's 185,000 b/d refinery at Kawasaki, but it is near JX's Negishi and TonenGeneral's Kawasaki plants so it likely to be shut. Idemitsu's 220,000 b/d Chiba refinery could also not be contacted but is likely to be shut for safety checks since other refineries in the area have been shut down.

But Fuji Oil's 140,000 b/d Sodegaura refinery near Tokyo bay is operating normally.

The loss of so much refinery capacity could complicate efforts to restore power supplies with so much of the area's nuclear power capacity also shut in the wake of the earthquake. Japanese utilities often turn to fuel oil, as well as direct-burning crude, to use in thermal power plants to offset lost nuclear capacity. But with so many refineries off line and port infrastructure also affected that will restrict imports, the alternatives are further reduced.

Japanese utility Tokyo Electric Power (Tepco) has previously had to shut large parts of its nuclear power capacity, which saw a spike in imports and consumption of thermal generation fuels. Fuel oil imports by the country's main utilities in 2003 surged 60pc against the previous year to 177,000 b/d following a data falsification scandal that saw all 17 of Tepco's reactors shut for safety checks. Crude imports also increased nearly 50pc to 113,000 b/d, while LNG arrivals were up nearly 9pc to above 40mn t/yr.

A more limited increase in thermal fuel was seen after Tepco's 8,212MW Kashiwazaki-Kariwa plant in Niigata prefecture was shut for nearly two years following another earthquake in July 2007. Then the utilities' fuel oil and crude imports rose more than 20pc year the following year, with LNG arrivals up 4.4pc.

Send comments to feedback@argusmedia.com
mm/mh/kt/rjd 2.3

If you would like to review other ArgusMedia.com content options, request more information about Argus' energy news, data and analysis services.

Copyright © 2011 Argus Media Ltd - www.ArgusMedia.com - All rights reserved.