15 de mayo de 2015 / 10:50 / en 3 años

Japan refiners target power business as profits evaporate

* Refiners eye coal- and gas-fired plants to offset oil business

* Power market reform, eased regulation spur power plant boom

* Refiners also eye petrochemical units amid falling oil demand

By Osamu Tsukimori

TOKYO, May 15 (Reuters) - Japanese refiners are accelerating plans to invest billions of dollars in power stations to try to drum up more stable income as flagging oil demand at home erodes their core business, executives and analysts said.

The slump in oil prices since last summer has caused more pain for the refining sector, with accumulated losses totalling $4.6 billion in the last year.

Cosmo Oil said it would cut refining capacity by as much as a third by 2017.

As well seeking to take advantage of an opening up of the 8.1 trillion yen ($68 billion) retail electricity market, refiners are also pushing into more profitable uses of crude by producing petrochemicals.

The Ministry of Economy, Trade and Industry (METI) has been pushing refiners to cut capacity as domestic demand is forecast to fall by more than 7 percent in the next five years.

Every week, nearly 20 gas stations close on average in Japan after demand has fallen by about 22 percent over the last decade.

TonenGeneral Sekiyu KK has been working to build two of its first large-scale power plants.

“Half (a) floor of people are now thinking about this stuff, so it is a serious undertaking,” Managing Director David Csapo said on Friday, after TonenGeneral announced a first quarter loss.

In the last week, three of Japan’s big five refiners reported full-year results for the financial year ended March, while two announced first-quarter earnings.

The alternative if their investments fail: mergers.

METI wants no more than two or three major refiners, from five now, and sources say Idemitsu Kosan and Showa Shell Sekiyu are in merger talks.

“Refiners have to launch projects quickly to take advantage of power market reform, and the quicker, the better,” said Hidetoshi Shioda, analyst at SMBC Nikko Securities.

“The pace of investments is accelerating from last year, and will probably peak this year amid the shutdowns of nuclear plants,” he said, referring to the closure of reactors after the 2011 Fukushima disaster.

Refiners will decide on plans to build three coal- and gas-fired plants for an estimated cost of as much as $7.6 billion with total capacity of up to 5 gigawatts, more than 30 times the capacity of projects announced in 2014.

JX Nippon Oil & Energy is expected to build an additional unit at its 51-percent owned 800 megawatt Kawasaki power venture with Tokyo Gas this year, Shioda said, adding it may announce a separate large-scale project.

Yukio Uchida, JX Holdings’ Executive Vice President, said the refiner is looking at increasing power generation along with investing in a new refinery in Southeast Asia.

Refiners are also shifting to petrochemical production and TonenGeneral in January said it will build a mixed xylene unit. (Editing by Aaron Sheldrick and Ed Davies)

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