Japan sees Russia as 500,000 b/d oil supplier by 2015
By Takeo Kumagai in Tokyo
December 13, 2010 - The startup this year of East Siberia-Pacific Ocean (ESPO) shipments from Siberia has positioned Russia to add to its established role of LNG provider and become an increasingly important supplier of crude oil to Japan, which has traditionally depended on the Middle East for most of its imports. (See related map: East Siberia-Pacific Ocean (ESPO) crude oil pipeline).
Japan's total crude imports from Russia could rise to 500,000 b/d by 2015, after the commissioning of the second stage of the 30 million mt/year (600,000 b/d) ESPO pipeline, which will extend the line from Skovorodino in Russia's Far Eastern Amur region to the Pacific port of Kozmino.
The second phase is expected to begin operations in 2013 or 2014, according to industry sources and analysts. The pipeline capacity is then expected to jump to 1 million b/d, of which up to 700,000 b/d would go to Kozmino.
Potentially, the ESPO route capacity could be increased further to as much as 1.6 million b/d at a later date.
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"Japan's total Russian crude imports could rise to more than 500,000 b/d by 2015, once the ESPO-2 pipeline comes on stream," Masumi Motomura, chief researcher at Japan Oil, Gas and Metals National Corporation, told Platts.
"Russia could take a 12-13% share of the country's total crude import volume, given the expected production increases in the East Siberian region. Of that, Japan's ESPO crude purchases could rise to 400,000 b/d as local refiners have found the crude very useful," Motomura said.
Japan's Russian crude imports currently include the Sokol and Vityaz grades, as well as ESPO, which it started importing in March when it took a 50,000 barrel cargo.
Japan's LNG imports from Russia totaled 2.82 million mt in 2009, ranking it seventh on the list of the country's largest suppliers, according to data compiled by the Ministry of Economy, Trade and Industry.
Over the April-October period of this year, an 85% year-on-year increase in Japan's Russian crude import volumes to 271,000 b/d was recorded, due mainly to the startup in supplies of ESPO, METI's data showed.
Japan imported around 90% of its crude from the Middle East in 2009, but the share of imports from the region fell to about 86% over April-September this year, due mainly to increased imports from Russia, according to METI.
In September, Japan recorded its largest-ever monthly ESPO crude import volume of 149,000 b/d, METI's data showed. (See related tables: Japan ESPO crude imports; Japan's total Russian crude imports; Japan's Russian crude imports).
Russia was also the fourth-largest crude supplier to Japan that month, providing 327,000 b/d and accounting for 9.5% of total imports of 3.45 million b/d. Japan's average ESPO crude imports for 2010 stood at 99,000 b/d as of October, according to METI.
Since March, most Japanese refiners have bought ESPO crude for experimental runs at least once, and they have generally found the grade attractive as it has high yields of middle distillates and lower freight costs, sources said.
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