In Japan, the majority of the petroleum demand was in the transportation sector in the form of fuels such as gasoline. A large amount of petroleum was also used for energy generation since oil remained the dominant source in energy consumption. Furthermore, petroleum was refined into petrochemicals, which are used to manufacture chemical end products such as plastics and rubber and represent an important subsector of the Japanese chemical industry.
To become less dependent on oil imports for energy production and to decrease energy-related greenhouse gas emissions, the Japanese government is currently working on replacing fossil fuels with low carbon energy sources such as renewables and nuclear energy. As the Japanese energy sector is being restructured, the consumption volume of crude oil started to decline. Consequently, the import volume of crude oil decreased throughout the past decade.
In 2020, the production of petroleum fuels decreased and the gasoline retail price in Tokyo hit a low. Due to the outbreak of the COVID-19 pandemic, manufacturing and travel ceased worldwide, resulting in a smaller demand for fuel. However, the crude oil prices, and therefore fuel prices, started to increase again in 2021 as production and travel resumed. Prices were expected to rise further in 2022. Oil prices tend to change rapidly when something impacts supply and demand, refinery operations, or pipeline deliveries.
Idemitsu Kosan is the second-largest petroleum refiner in Japan. The company explores oil and gas reserves in Norway and Southeast Asia and produces and sells chemicals, high functional materials, and energy in Japan.
Japan remains dependent on oil imports
Since the crude oil reserves in Japan are minimal, over 99 percent of the supply was covered by imports. The main suppliers were Middle Eastern countries such as Saudi Arabia and the United Arab Emirates. Due to the high dependency rate on fossil fuel imports, energy security has become a central concern for the country. Another issue of oil usage is its environmental impact since fossil fuel combustion emits carbon dioxide and therefore represents a major driver of global warming and air pollution.To become less dependent on oil imports for energy production and to decrease energy-related greenhouse gas emissions, the Japanese government is currently working on replacing fossil fuels with low carbon energy sources such as renewables and nuclear energy. As the Japanese energy sector is being restructured, the consumption volume of crude oil started to decline. Consequently, the import volume of crude oil decreased throughout the past decade.
Current situation in the Japanese refinery industry
Oil refinery describes the industrial process where crude oil is transformed into petroleum products. The crude oil is usually imported and then refined domestically. Gasoline was the petroleum product with the largest production volume in Japan.In 2020, the production of petroleum fuels decreased and the gasoline retail price in Tokyo hit a low. Due to the outbreak of the COVID-19 pandemic, manufacturing and travel ceased worldwide, resulting in a smaller demand for fuel. However, the crude oil prices, and therefore fuel prices, started to increase again in 2021 as production and travel resumed. Prices were expected to rise further in 2022. Oil prices tend to change rapidly when something impacts supply and demand, refinery operations, or pipeline deliveries.
Major Japanese oil companies
Based on total assets, Eneos Holdings ranked as the largest oil company in Japan. The company owned the most oil refineries in the country and had the highest refining capacity. Since the archipelago has scarce domestic resources, Japanese oil companies mainly participate in projects overseas. Eneos is involved in oil exploration and production projects in resource-rich countries in the Middle East as well as Southeast Asia. Domestically, the company manufactures and sells oil-based products such as lubricants and petrochemicals and continues to expand its renewable energy segment.Idemitsu Kosan is the second-largest petroleum refiner in Japan. The company explores oil and gas reserves in Norway and Southeast Asia and produces and sells chemicals, high functional materials, and energy in Japan.
