Japans total fuel market, the world"s third-largest, is shrinking. The Ministry of Economy, Trade and Industry (METI) forecasted in April 2010 that Japanese total fuel demand would decline by an average 3.5 percent annually through March 2015, due to changes in social structure and global warming countermeasures. It is considered that the surplus refining capacity is around 20%. A new regulation was announced in July 2010 by METI for Japanese refiners to boost their capacity to process heavy oil into lighter oil products by March 2014 either by introducing new residue cracking units or reducing refining capacity.
Under the circumstances, Japanese refiners focus on advanced integration between refineries and petrochemical complexes to keep cost effectiveness. Japanese petrochemical complexes have been established within affiliated companies' integration since early times. In recent years, it became difficult to reduce cost further through affiliated company's own efforts only. Therefore the scale of integration is becoming wider by accepting participants beyond company's boundaries.
This paper discusses the examples of integration and industrial symbiosis in Chiba area (near Tokyo) that Idemitsu has participated in. Chiba area is a "Major supply base to Japanese industry". This area includes four refineries, five steam crackers and steel production.
In conclusion, Japanese refiners will continue to survive through integration between refineries and petrochemical complexes, and will seek further efficiency and rationalization with reducing inefficient refining capacity. The integration is not only cost effective but also value-added, and will contribute to carbon dioxide reduction and rural environment preservation.
Increased Japanese demand for the products can no longer be expected, due to the peaking out of population and economic reasons that have been temporarily set back by the world financial crisis. Refining and petrochemical production capacities have increased in China, India and the Middle East. Especially, Japanese steam crackers have not increased those capacities. The Japanese petrochemical industry would be drastically affected by expansion of the capacity in the Middle East in the future. Additionally, Japanese plants are older and smaller than any competitors in Asia and the Middle East. In Japan, the need for environmental conservation is becoming more strict, and under the circumstances, initially, surviving refineries should increase efficiency and establish high profit value chains by various petrochemical feedstocks. Secondly, refineries should integrate with petrochemical complexes for the purpose of cost-effectiveness and added value.