Japan's oil industry: Matching supply with demand

Abstract

Since 1979, Japan's demand for oil, especially for residual fuel oil and naphtha, has sharply declined because of conservation and shifts to alternative energy sources. Demand for lighter products, however, is expected to continue to increase until 1995. Disposal of excess capacity, changes in operating conditions, and modification of existing units have been taken as countermeasures to the changes in oil demand. New upgrading facilities will be needed. Japan's oil industry suffered from the two oil crises; to promote improved management efficiency and rationalization, it has reorganized itself into seven groups. The new OPEC downstream projects will greatly influence the trade of oil products in the Asia-Pacific region. Japan must pursue an optimal path between installation of upgrading facilities and imports of middle distillates. Long-term energy forecasts by the Institute of Energy Economics (IEE) predict that the ratio of fuel-oil import to inland consumption will rise from 10% at present to about 15% in 1990. This means that onshore refining in consuming areas will still be the basis of Japan's oil supply, although oil product imports will also be increased. Regional discussions are suggested to determine whether an overall balance between oil supply and demand in the Asia-Pacific region can be found.