Japanese oil refiners should consider diversifying supply sources as 95% of its crude imports come from the Middle East, but importing Canadian oil could be challenging due to its heavy characteristics, the head of the industry association said on Thursday.
Canada’s main oil-producing province of Alberta is considering a financial investment in Japan’s refining sector, according to two sources familiar with the matter, an attempt to reduce its overwhelming dependence on top trade partner, the United States, for oil exports.
Alberta’s government is in early talks with several Japanese crude oil refiners to explore a joint venture in which it could help fund the construction of a coker unit that would enable one or more Japanese companies to process heavy crude produced in Alberta’s oil sands, the sources said.
“There is no specific request being made to us at this time,” Shunichi Kito, president of the Petroleum Association of Japan (PAJ), told a news conference, when asked about Alberta’s move.
While Japan should consider diversifying away from Middle Eastern crude, Kito said importing Canadian oil would be difficult due to its heavy quality.
Kito, who is also president of Idemitsu Kosan, Japan’s second-largest oil refiner, said he found it hard to imagine investing in new facilities, citing a roughly 2% annual decline in domestic oil demand. But he said the decision ultimately rested with individual companies.
(Reporting by Yuka Obayashi; Editing by Bernadette Baum)