Japan Energy, Mitsubishi Chem plan US$590 mln petrochem investment

08-Nov-05

Aiming to tap Chinese demand and to secure naphtha supplies amid an expected fall in Middle Eastern exports, Mitsubishi Chemical Corp. and Japan Energy Corp. plan to jointly invest 70 billion yen (US$590 million) in refining and petrochemical units. Japan Energy will contribute 90% of the investment, with top Japanese petrochemical maker Mitsubishi Chemical picking up the rest. Construction will start in September 2006, and the units are expected to begin operations in January 2008. The project includes a 60,000 barrel per day (bpd) condensate splitter, a 20,000 bpd reformer, a 410,000 tpa paraxylene unit, 578,000 tons of light naphtha and 170,000 tons of benzene at Kashima Oil Co.'s 190,000 bpd refinery in eastern Japan. Mitsubishi will be able to secure light naphtha at a time when prices could rise because of an expected drop in exports from the Middle East, where many petrochemicals plants are due to come on stream or expanded in coming years. The new naphtha splitter will enable Mitsubishi Chemical to reduce its annual naphtha import volume of 3.6 million kl by nearly 24%. Asian refiners have been adding condensate splitters in their refineries recently in their efforts to reduce high naphtha import costs. The only one currently in use in Japan is Taiyo Oil's 30,000 bpd splitter, at its 120,000 bpd Shikoku refinery. Japan Energy and Mitsubishi Chemical said they are also considering a similar project in Mizushima, western Japan, where they operate refinery and petrochemical plants like Kashima.