Eneos to Close Two Base Oil Plants

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Eneos to Close Two Base Oil Plants
The Wakayama refinery in Japan is one of two plants that Eneos Corp. is closing. © The Yomiuri Shimbun via AP Images

Eneos Corp., said this week that it will close its refinery in Wakayama, Japan – which includes a base oil plant – by 2023.

Combined with previous announcements concerning the closing of the company’s Negishi refinery near Tokyo, Japan’s largest base oil producer will see its capacity drop by 50%.

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A company spokesperson told Lube Report that the company will close the Negishi refinery, including the base oil plant in eastern Japan, in October 2022 and the plant in Arida city, Wakayama prefecture in western Japan, in October 2023.

The Negishi base oil plant has capacity to make 229,000 metric tons per year of API Group I stocks, and Wakayama base oil plant has capacity of 360,000 t/y, also Group I, according to Lubes’n’Greases’ Base Stock Plant Data. 

With the closure of both plants, Enoes’ total base oil capacity will be reduced to 588,000 t/y, lower than Idemitsu Kosan’s total capacity of 595,000 t/y from its two base oil plants. 

Eneos has five base oil plants in Japan with a total capacity of 1,177,000 t/y.  The remaining are two base oil plants in Mizushima with a total capacity of 411,000 t/y, and one base oil plant owned by Wakayama Petroleum Refining Co. Ltd., a subsidiary of Eneos, in Kainan, with a capacity of 177,000 t/y.

“Lubricant products from the Wakayama refinery are sold through EMG Lubricants, a subsidiary of Eneos,” the spokesperson said, adding that EMG Lubricants would have discussions about the supply of base oil with each customer. “For Eneos, there is no impact on the procurement of base oil.”

In a Jan. 25 press release in conjunction with an online press conference by Ota Katsuyuki, representative director and president of Eneos, the company said, “The various circumstances in the environment surrounding the petroleum refining and marketing businesses – which include the rapid reduction in demand due to the recent spread of COVID-19 besides structural domestic demand decline for petroleum products and severe international competition mainly in Asia – were considered comprehensively.”

The company added, “As a result, it was determined that there was a pressing need to optimize the manufacturing of refineries and plants as well as the supply network for petroleum products.”

Last November, in a presentation to shareholders, the company said, “Demand for domestic petroleum products is still weak, and is still below the level seen before the COVID-19 pandemic. COVID-19 has accelerated movement toward a decarbonized and recycling-oriented society.” 

With a weak market, the company decided to withdraw from the coal business and sold its overseas coal mine interests in July 2021 following changes in the business environment toward a decarbonized society. The company will be expanding its renewable energy business through acquisitions of renewable energy companies and expanding their renewable energy generating capacities.