March 28, 2015 / 2:56 PM / 4 years ago

Petrobras to shut Japanese oil refinery on Okinawa

TOKYO (Reuters) - Brazil’s state oil company Petrobras has decided to shut its refinery on the Japanese island of Okinawa, it said on Saturday.

“Petrobras informs that the company has decided to start the plan to withdraw from Okinawa,” the company said in a statement.

“The plan calls for closure of the refining activities of Nansei Sekiyu refinery.”

Petrobras had said in 2011, the year after it took full ownership, that it would consider selling its Nansei Sekiyu subsidiary, operator of the 100,000 barrels-per-day (bpd) Nishihara refinery on Okinawa.

But no sale ever materialized, and industry sources and analysts have said there is scant interest in such a small, simple refinery that processes only expensive crude for the local market, where fuel demand is on the wane.

Petrobras said in its statement that until the plan for withdrawal is completed it would maintain close collaboration with the Japanese trade ministry and continue operating the related marine terminal to maintain fuel supplies to Okinawa.

“Throughout the process, Petrobras, committed to the people of Okinawa and its local work force, will continue to act in a responsible manner and in alignment with the best practices of social and environmental responsibility,” it said.

On Friday the Nikkei business daily had reported that Petrobras would shut down the sole refinery in Okinawa as early as this year and build an import terminal that it would sell to another refiner.

Petrobras had earlier also considered upgrading the refinery with more complex secondary units and boosting sales to China, the world’s second largest oil importer after the United States.

The Brazilian company bought 87.5 percent of Nansei Sekiyu in 2008 for around 5.5 billion yen ($46.09 million) from Japanese refiner TonenGeneral Sekiyu, and made it a wholly-owned subsidiary in 2010.

For the past year Petrobras has been embroiled in a corruption scandal in Brazil, with police and prosecutors saying that company officials appointed by leading politicians conspired with construction and engineering executives to inflate contract prices.

($1 = 119.3200 yen)

Reporting by Osamu Tsukimori; Editing by Greg Mahlich

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