Huddled deep within Tokyo's government district, nearly two dozen of Japan's top oil experts pore over a problem plaguing their industry: How can they stop China from pushing its crude refiners into a corner?
The task force, summoned by the trade ministry, needs a strategy to save oil refiners battered by years of declining demand at home. The processors, including JX Holdings Inc. and Idemitsu Kosan Co., now face rising competition for sales in Asia, the world's biggest oil market. The ministry fears that China's move to adopt stricter fuel standards will spur regional rivals into producing higher quality products, forcing Japan out of the market.
"We've been saying for more than 20 years that Japanese refiners should become stronger," said Hidemasa Nishiyama, director of the trade ministry's petroleum refining and reserve division. "The external environment has changed: the capacity of China and other countries is becoming excessive, and their exports could surge."