Sumitomo Corp. and Brazil's Petroleo Brasileiro SA plan to spend ¥100 billion to upgrade an oil refinery in Okinawa to tap rising petroleum demand from China and Southeast Asia, Sumitomo said Monday.
The two companies may install additional units that can process heavy fuel oil into lighter grades at the 100,000 barrel-a-day refinery to boost exports of gas oil and gasoline to other parts of Asia, said Yoshio Morinaga, Sumitomo's deputy head of the petroleum business development division.
Sumitomo holds a 12.5 percent stake in the refinery. Petrobras agreed Nov. 9 to buy 87.5 percent in the plant from TonenGeneral Sekiyu KK., the refining unit of Exxon Mobil Corp., for $50 million. The Rio de Janeiro-based company plans to use the Okinawa plant to increase sales of petroleum products, including biofuels in Asia.
"Petrobras's appetite for overseas investment is a big plus for Sumitomo," Morinaga said. "Okinawa's proximity to China and Southeast Asian nations would be a benefit for oil product exports."
Oil refiners in Japan have either shut or downsized plants over the past decade because a shrinking population and energy conservation adopted by households and factories have kept domestic fuel demand stagnant.