Instead of upgrading the plant to meet government regulations, Idemitsu Kosan Co has decided to scrap its 120,000 bpd Tokuyama refinery by March 2014, as per Reuters. With this, the 640,000 bpd refining capacity of Japan's third-largest oil company will be reduced by nearly 20% from four plants. The company would continue petrochemical operations at the plant and use the site as a fuel shipment hub. Idemitsu plans to import naphtha from international markets to feed the two petrochemical crackers at the plant with capacity to produce a total of 623,000 tpa of ethylene.
Japanese Ministry of Economy, Trade and Industry (METI) regulations call for refiners to build more complex units at simple plants to process heavy oil, or to shut them down. Japan's refining industry is consolidating as demand for gasoline and other oil products falls with a shrinking population and a shift toward fuel-efficient cars.