ENEOS, Japan’s largest refiner, does not plan to sign new contracts to import Russian crude oil. Indeed, the decision follows Russia’s invasion of Ukraine, said Tsutomu Sugimori, president of ENEOS Holdings, on March 22.
ENEOS will receive some vessels carrying Russian crude oil cargoes until April. This is in accordance with the purchase contracts signed before the invasion in February. Sugimori states that:
“For these [cargaisons], we have secured the vessels and will be able to make our payments.”
ENEOS looks to the Middle East
Russia supplies 4% of Japan’s crude oil imports, or 2.48 million b/d in 2021.
ENEOS said it would likely procure additional barrels from the Middle East. Today, 92% of Japan’s crude oil imports come from the Middle East, according to Ministry of Finance data.
ENEOS as part of a broader trend
The decision comes at a time when a growing number of companies are reluctant to import Russian crude and LNG. They fear for their reputation, as shown by the recent outbursts from BP, Shell and recently Total.
In addition, ENEOS is facing new regulations in its country. The nation’s refiners are required to submit their responses to the 3rd round of refining regulation. These regulations require refiners to increase the volumes processed by “vacuum” processes. That is to say, the passage under vacuum followed by a reduction in atmospheric pressure to remove impurities from the oil. And this is by the end of FY 2021-2022 (April-March) compared to the average volumes processed in FY 2014-2015 and FY 2017-2017.
Sugimori replied that it will be difficult to achieve the goals set by this new regulation.
In short, the distance taken by ENEOS from the Russian market is part of a broader trend. Indeed, oil companies, fearing for their reputation, and facing public demands, tend to turn away from Russian energy. This trend is accompanied by a realignment towards the Middle East to meet energy needs.