JX Nippon Oil & Energy Corp. is considering shutting down oil refinery operations at its Muroran plant in Hokkaido by the end of March 2014, sources said.
The government is requiring oil wholesalers to scale down refinery capacities by the end of fiscal 2013 amid stagnant domestic demand for gasoline due to the increase in the number of electric cars and fuel efficient vehicles as well as declining automobile sales.
JX Nippon will keep the Muroran refinery as a manufacturing plant for petrochemical products and keep its employees via job displacement, the sources said.
The company has already cut its daily output by 400,000 barrels from 2008 and has now decided to cut output by an additional 200,000 barrels by the end of March 2014. By shutting the Muroran plant, the company will cut 13 percent of its group refinery capacity, which is equivalent to daily output of 180,000 barrels.
JX Nippon, however, issued a statement Sunday, saying, "There is no such fact that the company has decided on concrete plans (concerning the refinery) at this point."
Idemitsu Kosan Co. has already decided to end refinery production at its Tokuyama refinery in Yamaguchi Prefecture in March 2014, and Cosmo Oil Co. has said it will shut down its Sakaide refinery in Kagawa prefecture next July.
According to the Petroleum Association of Japan, demand for fuel oil in Japan declined to about 200 million kiloliters in fiscal 2011 from 250 million kiloliters, its peak, in fiscal 1999.