Nippon Oil To Ramp Up Production of Petrochemicals From Heavy Oil, Reduce Gasoline Output

12 September 2006

Nikkei. Nippon Oil has developed a technology to efficiently produce propylene, a raw material used in the manufacture of synthetic fibers and plastics, from heavy oil.

The company will invest roughly ¥50 billion (US$425 million) to implement the technology in a plant to process 3,000-5,000 barrels of heavy oil for an output of roughly 40% propylene, 40% gasoline.

A conventional system generates only a few percent of propylene, converting 60% of the heavy oil into gasoline.

Demand for gasoline in Japan declined in the year to March 2006 for the first time in 21 years, and still continues to follow a downward trend. Since the profitability of gasoline refining has been deteriorating due to high crude oil prices, Nippon Oil has decided that shifting to petrochemical products, for which there is a strong global demand, would improve the firm’s earnings.

The new plant is slated to come on stream in 2009.