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Okinawa refinery being bought by Brazil company

Date Posted: 2006-09-22

Okinawa’s key oil refinery is being targeted for buyout by a South American company.

Kansei Sekiyu K.K., operating in Okinawa, is reportedly being purchased by Petrobras, the state-owned oil company in Brazil. Acquisition details are sketchy, but reports are that the Brazilian company plans to purchase and transform the refinery into a modern, state-of-the-art facility capable of handling high viscosity heavy oil.

Industry experts say Nansei Sekiyu is currently less competitive than rivals because of old production facilities. The Okinawa refinery is 87.5% owned by TonenGeneral Sekiyu K.K., an arm of Exxon Mobil Corporation. The remaining stock is held by Sumitomo Corporation.

Petrobras is known for developing undersea oil fields, and is now expanding into Asia. Known officially as Petroleo Brasileiro SA, Petrobras currently cranks out 1.8 million barrels of oil per day, enough to meet the bulk of Brazil’s oil requirements. Petrobras, according to industry insiders, will refine Brazilian crude here in Okinawa, then sell to China and other Asian countries.

The move comes at a time when oil demand here is slipping, leaving refineries producing well below their daily capabilities. Officials say Japan’s combined oil refining capabilities are nearly 5 million barrels daily, but point out 20% of that capacity is not being used.

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