Refining Direction ASIA OIL & GAS MONITOR

12 December 2012 Week 49 AsianOil Issue 355 News Analysis ASIA OIL & GAS Intelligence Published by MONITOR NewsBase COMMENTARY 2 NEWS THIS WEEK… Japanese refineries look overseas for investment opportunities 2 MTQ plans to expand its subsea Refining direction service capabilities 4 Japan’s refiners are looking at developing capacity INVESTMENT 6 overseas while shutting down domestic plants. Australian gas exporters face possible price squeeze 6 Japan’s downstream sector has been struggling in Chevron remains committed to the face of falling domestic demand and ageing Australian LNG projects 6 ONGC receives Eni nod for Kashagan plants. acquisition 7 The country could see a 20% reduction in capacity Medco Energi completes acquisition of Yemen block 8 in the next few years. (Page 2) PERFORMANCE 8 Pertamina’s investment programme to Subsea surge help transform performance 8 POLICY 9 Singapore’s MTQ Corp. is positioning itself to China, Vietnam lock horns over South capitalise on rising demand from the offshore China Sea 9 energy sector for subsea services, the group’s CEO, Indonesian upstream industry warns over law change 10 Kuah Boon Wee, has told AsianOil. PROJECTS & COMPANIES 10 The company is looking to buy a 100% of BP drills first well in KG Basin 10 JX Nippon plans Mizushima plant Australia’s Neptune Marine Services in a bid to maintenance 11 expand its range of niche subsea services. (Page 3) Malaysia’s MHB wins new ExxonMobil contract 11 Petrofac starts gas production at Investment ambition Berantai field 12 The Indonesian government expects Pertamina’s South Korean refiners plan 2013 CDU more than US$15 billion investment programme to maintenance 12 Bangchak Petroleum looks to relocate transform the company into a world-class energy refinery 13 player. NEWS IN BRIEF 13 STATISTICS 23 The investment will fund a mixture of domestic CONFERENCES 26 projects and foreign asset acquisitions. (Page 6) For analysis and commentary on these and other stories, plus the latest oil and gas developments, see inside… Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Andrew Kemp All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents AsianOil 12 December 2012, Week 49 page 2 COMMENTARY Japanese refineries look overseas for investment opportunities The country’s refiners are looking for ways to become more efficient and are shutting down unused domestic capacity while looking at overseas projects By Mark Buckton JX Nippon plans to close its Muroran refinery by March 2014 Japan could see its refining capacity dip by as much as 20% in the next few years Idemitsu is looking to expand into Vietnam’s downstream segment With the eyes of most in Japan on the refineries up and down Japan. to imitate the electronics and motor December 16 general elections and the Cuts in petrol demand are, ironically industries by moving offshore in an nuclear policies being put forth by the enough, largely a result of motor industry effort to return to profitability. leading candidates, few, beyond those in giants’ efforts to meet public demand for To this end, Idemitsu – already a 35% the industry, have paid much attention to more and more hybrid and fuel-efficient owner in what would be Vietnam’s a recent JX Nippon Oil and Energy Corp. engines. largest-ever refinery complex – is said to decision to close down one of its main Throw in lower taxes on smaller be putting the finishing touches to a deal domestic refineries located in Muroran, engines, people reluctant to drive as that would help keep the fuel supply lines Hokkaido. much as a result of expensive tolls on open whilst enabling the company to As part of industry-wide cuts that may domestic highways, and some of the shore up operations at home. see refining capacity nosedive by up to most efficient, relatively cheap public The complex itself is set to be run by 20% in the next few years, Muroran, in transportation networks in the world, and state-owned PetroVietnam and, while many ways, looks like being the tip of the decline in demand is unlikely to exact numbers have not been released on the iceberg in terms of Japanese refining change anytime soon. just how much and of what type of fuel cutbacks. However, as hard as the Muroran will eventually make its way to Japanese JX Nippon announced in November closure will be felt locally on Hokkaido, shores, will at least enable Idemitsu to that the facility in northern Japan would when coupled with a host of smaller write off unprofitable machinery and close by March 2014. This is, partly, a refineries also announcing upcoming assets in Japan. result of the country’s falling demand for closures, Japanese companies are looking Domestic labour costs will remain an fuel as well as Japanese refineries that increasingly to overseas refineries to issue for the foreseeable future, though, operate at less than 80% of capacity. supply the country with cheaper oil and may well see Idemitsu and the Indeed, when outdated equipment from products. industry at large prefer to stay with the 1950s and 1960s and plants that overseas refineries in the future. operate at half the rate of their foreign Unsurprising turn of events However, with increasing calls from counterparts are added to the equation It is thus no real surprise that the Japan’s government for more fuel self- the outlook only become worse. country’s second largest refiner, Idemitsu sufficiency and increased investment into Kosan, is looking to expand into Vietnam renewable energy, the oil industry may Compound problem rather than at home. Japanese refineries well find itself boxed into a corner. These problems are further compounded looking for long-term survival are aiming by the ongoing economic lull, as millions Taxing times of Japanese opt to stay nearer to home The introduction of a tax on imports of this Christmas rather than making long Japanese companies are oil products and LNG on October 1 is road trips, and as government-backed already starting to pinch, with domestic energy-saving policies kick in with the looking increasingly to power fees in the next fiscal year likely winter months approaching. overseas refineries to to increase between 8.51 and 12% in Also, the domestic motor industry some places. For businesses in the same dominated by Toyota, Nissan and Honda supply the country with areas this figure could rise to around is only adding to the pressure felt by cheaper oil products 14%. Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Andrew Kemp All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents AsianOil 12 December 2012, Week 49 page 3 COMMENTARY Yet, while this is an issue largely off Higher taxes on overseas fuel and eliminate Japan’s reliance on nuclear and the public radar at present, and mainly reduced taxes for domestically refined oil fossil fuels to play a part in just how ignored by the media, increased products would not be unexpected as a much JX, Idemitsu and their fellow household bills and ongoing strife over long-term job creation scheme. refiners are prepared to invest overseas in the use of nuclear power will see Tokyo As unlikely as any significant moves in the years ahead. looking for ways to bring the oil this direction are in the immediate future, companies back into line. however, look for the populist calls to MTQ plans to expand its subsea service capabilities The Singapore-based company is positioning itself to meet the rising demand from the offshore energy sector for subsea services By Amrit Sidhu The company aims to expand its presence in Asia, Australia and the Middle East MTQ wants to increase its stake in Australia’s Neptune Marine Services to 100% The company is striving to deal with labour challenges in Singapore and Bahrain Singapore-based oil and gas service it is an opportunity to have more subsea market outlook is strong,” he said, provider MTQ Corp. aims to expand its niche services, underwater maintenance, adding: “We are ramping up our footprint in the subsea segment and has surveys, diving [and] pipeline activities at the 40,000-square metre pointed to the strong growth potential of installations. We feel there is an facility in Bahrain.” markets in Asia, Australia and the increasing amount of work.” Kuah sees the Bahrain facility Middle East. He added: “Overall, there is a lot of becoming a significant component of In a recent interview with AsianOil, the market potential in South-East Asia, MTQ’s business, but noted that it was group’s CEO, Kuah Boon Wee, spoke of Australia and the Middle East. Billions of still “early days” when considering the company’s takeover bid for Perth- dollars of investment are pouring into growth targets. He noted: “The Bahrain based Neptune Marine Services as Asian markets, mostly for offshore facility is near water with good complementing MTQ’s existing portfolio projects involving subsea [components].” infrastructure. It will focus on Saudi of subsea services. The executive wants to position MTQ Arabia [at] the start,” he said. MTQ, which already owns about 20% so that it benefits from the rising demand stake in Neptune, launched its bid in late for subsea services in all three regions.

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