Japan's major oil refiners have recovered from last year's steep losses with all reporting a profit for the April-June quarter, but they continue to face headwinds as COVID-19 cases spiral to record highs in the country's fifth wave of the pandemic.
Eneos, Japan's biggest refiner that accounts for about half of Japan's fuel market, on Friday reported profit of 98 billion yen ($888 million) for the first fiscal quarter, versus a 5 billion yen loss a year earlier. Sales rose 44% but were 12% below the same quarter in 2019 before the pandemic.
"The impact of the spike in new coronavirus variant infections is uncertain and there is a risk that the recovery in fuel demand will be delayed," Eneos Senior Vice President Soichiro Tanaka told reporters.
Idemitsu Kosan reported last week a net income of 88 billion yen versus a year-earlier loss of about the same amount, but warned future profits may be strained as the pandemic clouds the outlook at home and overseas.
Japan's top health adviser has requested for stricter COVID-19 curbs to control the contagion, which he said should be treated as a natural disaster, while the International Energy Agency (IEA) has flagged a hit to global oil demand due to the spread of the more infectious Delta variant of the virus.
Japan's refiners, which have been cutting capacity as long-term fuel demand wanes with the country's declining population, were hit hard last year when the pandemic briefly led to negative oil prices.
Their sales have not yet recovered to pre-pandemic levels and, in the quarter just ended, were as much as a fifth below that of the same period in 2019.
Sales for Cosmo Energy, which swung to a 28 billion yen quarterly profit, rose 20% from a year earlier but were still down 22% from the same period in 2019.
The IEA said on Thursday the rising demand for oil abruptly reversed course in July this year and was set for a slower recovery through the end of 2021.
"Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use," it said.
Recommended Reading
Venture Global Seeks FERC Actions on LNG Projects with Sense of Urgency
2024-02-21 - Venture Global files requests with the Federal Energy Regulatory Commission for Calcasieu Pass 1 and 2 before a potential vacancy on the commission brings approvals to a standstill.
The Problem with the Pause: US LNG Trade Gets Political
2024-02-13 - Industry leaders worry that the DOE’s suspension of approvals for LNG projects will persuade global customers to seek other suppliers, wreaking havoc on energy security.
Hirs: LNG Plan is a Global Fail
2024-03-13 - Only by expanding U.S. LNG output can we provide the certainty that customers require to build new gas power plants, says Ed Hirs.
Everywhere All at Once: Woodside CEO Touts Current Global Portfolio
2024-03-05 - Meg O’Neill, the CEO of Australian energy giant Woodside Energy, is overseeing the “next wave” of growth projects around the globe, including developments in the Gulf of Mexico, offshore Senegal and further LNG expansion.
Wanted: National Gas Strategy for Utilities, LNG
2024-02-07 - Chesapeake CEO Nick Dell’Osso and Mercator Energy President John Harpole, speaking at NAPE, said some government decision-makers have yet to catch on to changes spreading across the natural gas market.