Japan’s Idemitsu Earmarks $1.4bn for Clean Energy Projects

Idemitsu Kosan, a Japanese oil refiner, plans to invest 190 billion yen ($1.36 billion) to build infrastructure for imported ammonia and sustainable aviation fuel as it moves to become a dependable source of greener energy.

The petroleum group also plans to reduce the capacity of its oil refineries in anticipation of declining fuel demand. In the three-year business plan for Idemitsu that will go into effect in April, the commitments were laid out on Wednesday.

Japan's Idemitsu Earmarks $1.4bn for Clean Energy Projects

The business will set up facilities for producing sustainable aviation fuel in the Chiba prefecture, which is close to Tokyo, and establish a site for receiving imported ammonia in the city of Tokuyama, in western Japan. These initiatives are viewed as long-term investments.

In contrast to the 160 billion yen forecast for this fiscal year, Idemitsu’s business plan anticipates operating and equity income of 190 billion yen in fiscal 2025. The effect of inventories is not included in this income.

Due to anticipated price drops, the coal segment is preparing for a drop in profit, but this is likely to be more than offset by higher profit from chemicals and lubricants.

By cutting this segment’s profit contribution from over 90% to under 70% by the end of the current fiscal year (2025), Idemitsu hopes to become less dependent on fossil fuels.

In contrast to the 830,000 barrels predicted for March 2024, the group agreed to reduce oil refinery capacity to 650,000 barrels per day by 2030. But according to President Shunichi Kito, no cuts will be necessary in the three years leading up to fiscal 2025, indicating that the cut will take place in 2026 or later.

In spite of improved fuel efficiency for cars, the company anticipates a 20% decline in Japanese demand between 2022 and 2030.

Idemitsu also disclosed on Wednesday that it had successfully completed a tender offer to buy additional shares of a subsidiary it owned 50.1% of, Toa Oil. Expected delisting of the target company.

Reference: https://asia.nikkei.com/Business/Energy/Japan-s-Idemitsu-earmarks-1.4bn-for-clean-energy-projects