<article><p class="lead">Japanese refiner Eneos has cut 127,100 b/d of refining capacity at its Negishi and Wakayama refineries, to cope with the country's shrinking demand for refined oil products.</p><p>Eneos announced the scrapping of the 120,000 b/d No.1 crude distillation unit (CDU), one of the CDUs at its Negishi plant, <a href="https://direct.argusmedia.com/newsandanalysis/article/2176840">in January 2021</a>. The company did not disclose the exact closure date, but the CDU had stopped operating by 3 October. The Negishi plant previously had 270,000 b/d capacity, including the No.4 150,000 b/d CDU.</p><p>The company has also reduced the refining capacity at Wakayama plant by 7,100 b/d to 120,400 b/d. The Wakayama plant is <a href="https://direct.argusmedia.com/newsandanalysis/article/2295061">planned to be permanently closed</a> by October 2023. </p><p>Japan's total refinery nameplate capacity fell to 3.33mn b/d from 3.46mn b/d after the cuts, with Eneos' refining capacity of 1.74mn b/d accounting for 52.3pc of the country's total.</p><p>Eneos will also gradually shut the 270,000 b/yr base oil output unit and some secondary units related to the No.1 CDU at the Negishi plant, including a vacuum distillation and catalytic cracking unit. But it will maintain lubricant blending operations and deliveries, with base oil transferred from other refineries, the company said.</p><p>"Japanese refiners are unlikely to build new refining plants even after they close aged refineries, as Japan's overall oil product consumption has been declining by 2-3pc /yr," Petroleum Association of Japan (PAJ) chairman Shunichi Kito said on 29 September. "But they are spending costs for existing plants, which are to continue to operate, with improving oil product upgrading ratio."</p><p>Fellow refiner Seibu Oil also plans to <a href="https://direct.argusmedia.com/newsandanalysis/article/2340952">halt refining operations</a> at its sole 120,000 b/d Yamaguchi refinery in March 2024. Japan's oil refining capacity is likely to drop to around 3.1mn b/d after the closure of Eneos' Wakayama and Sebu Oil's Yamaguchi plants.</p><p class="bylines">By Maiko Nakashima</p></article>
