Japan Oil Distributors to Cut Output Further as Demand Tumbles

Tokyo, Nov. 28 (Jiji Press)--Major Japanese oil distributors plan
to cut production of gasoline and other petroleum products further toward
the year-end as demand is falling at a faster-than-expected pace amid the
economic slowdown.
Idemitsu Kosan Co. <5019> said Friday it will reduce its volume of
crude oil refining in October-December by an additional 100,000 kiloliters
from the initially planned level after announcing a reduction of 1.2 million
kiloliters in September.
Similarly, Showa Shell Sekiyu K.K. <5002> the same day unveiled an
additional reduction in its crude oil refining for the period. Cosmo Oil Co.
<5007> is also considering slashing its oil refining volume further.
In response to the deepening economic slump, major domestic oil
distributors are highly likely to continue cutting oil production after the
turn of the year.
Crude oil refining at industry leader Nippon Oil Corp. <5001> in
November is seen to fall by 520,000 kiloliters from the initially planned
level and by 25 pct from the year-before level. Nippon Oil now expects an 18
pct year-on-year fall in December.
In Japan, demand for gasoline has not recovered although retail
prices continue falling.
According to recent data released by the Oil Information Center,
the average retail price of regular gasoline came to 127.9 yen per liter as
of Tuesday, the lowest level in three years and three months, falling for
the 16th straight week after hitting a record high of 185.1 yen in early
August.
In addition, demand for oil products for industrial use, including
fuel and diesel oil, is projected to fall further because the plant
operation rate is dropping rapidly reflecting the economic slowdown.