MOSCOW (MRC) -- Japanese refiners reported strong earnings for April-September and lifted their annual forecasts as surging oil prices brought hefty valuation gains on inventories and boosted earnings from their upstream oil assets, reported Reuters.
The companies said they would use the additional cash to help pay for the investment needed in cleaner energy amid a global decarbonization push.
Japan's top refiner Eneos Holdings (formerly known as JXTG Nippon Oil & Energy) said on Thursday its first-half net profit rose 480% to 211 B yen (USD1.9 B) as the value of its inventories shot up while soaring copper prices also boosted its profit from metals.
The oil and metals giant doubled its profit forecast for the year to March 31 to 280 B yen, beating a forecast of 222 B yen based on the mean estimate from 10 analysts compiled by Refinitiv.
Earlier this week, the second biggest refiner Idemitsu Kosan and third-placed Cosmo Energy Holdings more than doubled their annual profit guidelines.
In their key refining operation, Idemitsu and Cosmo booked a profit gain as they benefited from recovering margins at home and abroad. Meanwhile, Eneos suffered a series of setbacks at its refineries which resulted in a refinery run for April-September of 61% while Idemitsu reached 73% and Cosmo's utilization was 95%.
"Higher resource prices led to a significant profit increase in upstream oil and metals assets, but the performance in our flagship energy segment was very unsatisfactory," Eneos' President Katsuyuki Ota told a news conference.
"The cash flow from the energy segment is the core source of our future investments in new businesses, so we must do better in this area," he said.
Like many other global oil companies, Eneos has been accelerating its transformation into a supplier of low-carbon energy and has decided to acquire a renewable company and invest in hydrogen projects.
"There is no time for complacency (about strong earnings) as 90% of our profit comes from fossil fuels. We'll allocate our cash to innovations to help our energy transition," Idemitsu President Shunichi Kito said.
"The oil business is the money tree. We generate cash from it and allocate the cash to renewable energy, which will enable us to make sustainable transitions," Takayuki Uematsu, Cosmo's senior executive officer, said.
As MRC wrote before, Japan's largest refiner Eneos Corp has restarted the 136,000-bpd crude distillation unit (CDU) at its Oita refinery. The unit was shut since May last year. It resumed operations in mid-August 2021.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
Japan's largest refiner JXTG Nippon Oil & Energy was renamed ENEOS Corporation on 25 June, 2020, as part of a wider re-organization of the parent company JXTG Holdings. The move, which also involved renaming the parent company to ENEOS Holdings upon approval at its annual shareholders meeting in June 2020, comes as it strives to be a more comprehensive energy and materials company under its 2040 vision announced in May, 2019. JXTG Holdings was formed as a result of a merger between JX Holdings and TonenGeneral in April 2017. This followed the establishment of JX Holdings as a result of the merger between Nippon Oil and Nippon Mining Holdings in April 2010.