Eneos Shutters Wakayama Refinery


Eneos Shutters Wakayama Refinery
© Karolis Kavolelis / Shutterstock.com

Eneos Corp. this month permanently closed its crude oil refinery in Arida city, Wakayama prefecture, Japan, including its largest remaining base oil plant, part of a multi-year strategy to scale down operations in its home country.

Japan’s largest energy company halted the crude distillation unit – the site’s key core front-end unit – on Oct. 16, a spokesperson told Lube Report, ultimately stopping the production of feedstock for the base oil plant.

The spokesperson declined to provide details about timing for the base oil plant but did add that base oil shipments will continue until March. Eneos is refitting the site to produce greener energy products such as sustainable aviation fuel.

The Wakayama base oil plant had capacity to make 360,000 metric tons per year of API Group I base stocks, according to Lubes’n’Greases Base Stock Plant Data. With its closing, Eneos has halved its base oil capacity in Japan over the past year. In October 2022 the company shut down most operations at its former Negishi refinery outside Tokyo, including a Group I plant with capacity of 229,000 t/y.

The company still operates two plants in Mizushima – one with capacity to make 209,00 t/y of Group I and 19,000 t/y of Group III, the other with Group I capacity of 183,000 t/y. Eneos also has a 28% joint venture stake in a 1.3 million t/y Group III plant at SK Enmove’s refinery in Ulsan, South Korea.

The closing also drops Eneos into second place among base oil producers in Japan. Idemitsu Kosan operates plants in Yokkaichi and Ichihara with combined capacity of 595,000 t/y.

Japan’s domestic oil industry has significantly consolidated in recent years. Demand for road fuels is falling because the population has slightly shrunk since 2010 and because cars are becoming more fuel efficient.

Japanese base oil and lubricant suppliers such as Eneos are consequently focusing on growth opportunities in foreign markets.