* Idemitsu shuts 220,000 bpd CDU at Chiba refinery after
* Brings total sudden, extended shutdowns in Japan to
* Shutdowns to reduce crude demand, may lift diesel premium
(Recasts; adds market impact, quotes)
By Osamu Tsukimori and Florence Tan
TOKYO/SINGAPORE, July 20 Japanese oil refiner
Idemitsu Kosan Co has shut a third of its capacity
after a fire, the latest outage in Japan that could reduce the
country's crude demand and curb fuel exports.
The outage occurred just a few days after Japan's largest
refiner JX Nippon Oil & Energy Corp started shutting
down a refinery in western Japan for an unexpected safety check
that could last a few months. Another refiner, Cosmo Oil Co
, has extended indefinitely maintenance on a crude unit
at its Chiba plant.
Without definite restart schedules, the total of 560,000
barrels per day (bpd) in sudden and extended shutdowns of
refining capacity could reduce demand for Middle East crude, as
well as curbing the country's diesel exports and buoying
regional premiums for the product.
"It's bad, bad news for crude, but good for products," a
Singapore-based oil trader said.
The outages have offset the restarts of some units that were
shut for maintenance in the second quarter, traders said.
Sentiment in the Middle East crude market is already weak as
the global economic slowdown has hit demand, they added.
Idemitsu Kosan said it immediately shut the 220,000
bpd No. 2 crude distillation unit (CDU) at its refinery in
Chiba, east of Tokyo, on Thursday evening after a fire struck
near the CDU's naphtha circulation lines.
The fire had been extinguished by early Friday morning, it
added. There were no injuries.
The CDU is likely to be shut for some time pending an
investigation into the incident, a fire department official
said, though he did not give a schedule for any restart.
Some secondary units are still operating, including a 45,000
bpd fluid catalytic cracking (FCC) unit, an Idemitsu official
He added that there has been no impact on product shipments
from the refinery, including truck and marine shipments, but
traders expect overall diesel exports from Japan to fall below
normal following the refinery outages.
This could lift diesel prices at a time when maintenance at
a refinery in Singapore and an increase in Australia's demand
have pushed July spot premiums to their highest in more than 15
Idemitsu on average exported about two 300,000-barrel
cargoes of diesel a month over January to May this year, a
Singapore-based trader familiar with the North Asian market
For July, the company is expected to load a similar amount
of diesel but had no jet fuel exports scheduled.
At least one cargo could likely be delayed or cancelled if
the CDU shutdown lasts for long, traders said.
"They will probably prioritise covering shorts in the
domestic market before looking at exports," said the trader.
Idemitsu's shutdown is not expected to impact naphtha and
low sulphur fuel oil (LSFO), traders said.
No naphtha crackers were shut while high stockpiles of the
light product in Chiba could also cushion the impact of refinery
shutdowns, a naphtha trader said.
The refiner also has term contracts to import LSFO, a fuel
oil trader said.
Idemitsu operates four domestic refineries with total CDU
capacity of 640,000 bpd. The other three refineries are all
(Additional reporting by Ramya Venugopal and Jessica
Jaganathan; Editing by Joseph Radford)