Japan Oil Refining Market Overview, 2030

Japan’s oil refining industry is characterized by an aging infrastructure with a declining number of operational refineries. The sector is dominated by major companies such as ENEOS Holdings and Idemitsu Kosan, which operate the largest refining complexes across the country. Over the past decade, Japan’s refining capacity has gradually reduced due to shrinking domestic demand driven by demographic decline, widespread electrification, and shifts toward renewable energy sources. Japan maintains a critical role in the energy value chain by focusing on high-value product exports and innovation in clean fuel technologies. The country’s refineries are often integrated with petrochemical complexes, enabling efficient use of crude inputs for a wide range of products, including petrochemicals and specialty fuels. Refinery utilization rates tend to remain high at operational plants but overall capacity rationalization has been guided by government policies aiming to optimize the sector for future energy needs. Geopolitical factors, such as global crude supply shocks and OPEC+ production adjustments, continue to influence crude availability and pricing in Japan’s import-dependent market. The industry faces increasing pressure from the government’s net-zero targets and environmental regulations, prompting investments in hydrogen and ammonia blending trials, cleaner fuel production, and emissions reduction initiatives. Recent developments include the planned closure or conversion of some aging refineries and significant emphasis on R&D for sustainable fuels, signaling Japan’s transition toward a lower-carbon refining future while balancing export competitiveness. Japan's biggest power generation firm, Jera, announced that it planned to increase imports of LNG from the United States, as the Tokyo government sought a trade agreement with Washington. The alliance promoted Jera's long-term ambition to create a diverse and resilient LNG procurement portfolio to ensure stable, secure energy for Japan and Asia.

According to the research report, ""Japan Oil Refining Market Overview, 2030,"" published by Bonafide Research, the Japan Oil Refining market is anticipated to add to more than USD 28.84 Billion by 2025–30. Government-led rationalization programs have encouraged refinery capacity reductions and closures to align supply with shrinking demand, reducing overcapacity and improving sector profitability. Japan continues to invest in refinery upgrades focused on producing cleaner fuels compliant with IMO 2020 sulfur limits and Euro VI emission standards, reflecting stringent environmental mandates. Despite challenges, Japanese refineries benefit from high refining margins and crack spreads driven by premium product exports, particularly in petrochemicals and specialized fuels. However, constraints arise from aging refinery assets, rising operational costs, and the green energy push associated with Japan’s ambitious climate goals. The sector is exploring opportunities in hybrid operations combining traditional refining with renewable fuel production, and digital refinery upgrades to enhance efficiency and reduce emissions. Feedstock price volatility and ESG compliance present ongoing challenges, compounded by Japan’s heavy reliance on imported crude. Recent developments include pilot projects for hydrogen and ammonia blending in fuels, reinforcing Japan’s commitment to integrating alternative energy carriers within its refining ecosystem. Japan Petroleum Exploration (Japex) revealed plans to invest in oil and gas exploration and production until 2030, modifying a previous strategy to rapidly grow its renewable energy sector. It aimed to find equilibrium among shareholder returns, financial stability, and investment discipline. QatarEnergy negotiated with Japanese energy firms regarding a long-term LNG supply agreement from the expanded North Field. The proposed volume was at least 3 Million Tons per year, which was to be allocated among several Japanese companies, including major players JERA and Mitsui & Co.

Japan’s gasoline demand is gradually declining due to the rising adoption of electric vehicles and stringent government policies encouraging energy transition. Private vehicle owners in urban areas increasingly prefer hybrid or electric alternatives, reducing reliance on conventional gasoline. Diesel fuel remains vital for commercial transport, logistics, and industrial sectors, supporting trucks, buses, and heavy machinery. Despite efforts to promote cleaner alternatives, diesel consumption continues due to its efficiency in freight and off-road applications. Jet fuel demand is concentrated around major international airports such as Narita, Haneda, and Kansai, where air travel is recovering steadily with the resumption of outbound tourism and business flights following COVID-19 restrictions. Fuel oil consumption has significantly declined as many power plants shift toward liquefied natural gas (LNG) and renewables, aligning with Japan’s commitments to reduce carbon emissions and comply with stricter environmental standards. Asphalt demand remains stable, driven by ongoing domestic infrastructure projects and export opportunities, particularly in road construction and maintenance. LPG maintains a niche role in residential cooking and heating, especially in remote and rural areas where pipeline gas is limited. Lubricants continue to serve the automotive and heavy industrial sectors, while fuel oil’s reduced usage reflects a nationwide energy shift. The government enforces stringent fuel quality mandates to meet Japan’s environmental goals, including the adoption of cleaner diesel and low-sulfur fuels. These fuel type consumption trends illustrate a market transitioning toward cleaner energy sources while still maintaining critical demand for traditional fuels in transport and industry.

Road transportation remains the dominant consumer of refined fuels in Japan, with commercial logistics and passenger vehicles accounting for the largest shares of gasoline and diesel demand. The sector’s shift towards commercial logistics is evident as e-commerce and supply chain modernization boost freight transport needs. Aviation fuels are experiencing a steady recovery, particularly at major hubs such as Narita and Haneda, driven by increasing international and domestic air travel following the easing of pandemic restrictions. Marine bunkering activity is concentrated around coastal terminals like Yokohama and Kobe, supporting Japan’s extensive shipping industry, which plays a vital role in global trade and energy supply chains. The petrochemical industry integrates tightly with refining operations, with companies like JXTG Holdings operating complexes that produce feedstocks for plastics, chemicals, and synthetic materials. Residential and commercial usage of LPG persists mainly in rural or isolated regions, providing cooking and heating energy where natural gas infrastructure is sparse. Electricity generation from refined fuels has sharply declined, replaced increasingly by LNG, nuclear, and renewables, consistent with national decarbonization policies. Other niche applications include rail transport, domestic waterways, and agriculture, which use refined fuels like diesel and lubricants but represent smaller overall consumption. Regulatory efforts targeting fuel efficiency and emissions reductions strongly influence fuel use patterns, encouraging the gradual adoption of alternative fuels and cleaner technologies in transportation and industry.

Japan has no significant domestic crude oil production and relies almost entirely on imports to feed its refining sector, sourcing predominantly from Saudi Arabia, the United Arab Emirates, and Qatar. This reliance on Middle Eastern crude underscores Japan’s strategic vulnerability to geopolitical tensions and supply chain disruptions. Japan maintains robust crude storage facilities and diversified supply agreements to mitigate risks. Natural gas liquids (NGLs) form an important part of the feedstock slate, though their processing remains limited compared to LNG’s dominant role in power generation and industry. Integration of bio-feedstock in refining remains minimal, with pilot projects and early-stage initiatives testing co-processing of biomass and vegetable oils to produce renewable fuels. Coal tar and other unconventional feedstocks have negligible presence in Japan’s refinery feed mix. Price volatility in global crude markets and shifting crude quality profiles challenge refiners, driving investments in feedstock flexibility and upgrading technologies. The government’s energy policies encourage gradual feedstock diversification and cleaner processing methods as part of broader climate targets. Recent developments include increased interest in hydrogen as a future feedstock and fuel, as Japan positions itself as a global leader in hydrogen technology. Feedstock supply dynamics remain a crucial factor shaping refinery operations and investment decisions amid evolving environmental and market pressures.

Japan’s refining sector is built on a foundation of high-complexity facilities that enable advanced fuel processing and environmental compliance, with most major refineries operating conversion and deep conversion units. Companies like Eneos Holdings (formerly JXTG), Idemitsu Kosan, and Cosmo Energy dominate the sector with strategically located refineries in coastal areas such as Chiba, Yokohama, and Yokkaichi, facilitating easy access to imported crude and refined product exports. The deep conversion capabilities at these refineries include fluid catalytic cracking (FCC), hydrocracking, coking, and alkylation units, allowing the transformation of heavier, sour crudes into lighter, higher-value products such as ultra-low sulfur diesel, gasoline, and jet fuel. These configurations also support production of petrochemical feedstocks like naphtha and aromatics, which are vital to Japan’s manufacturing and plastics industries. Unlike many other countries, Japan has integrated oil refining with petrochemical operations to maximize value from each barrel of crude. Post-2014 regulatory reforms encouraged capacity consolidation and technological upgrades, which led to the closure of less efficient topping and hydro-skimming refineries, and a sharp focus on maximizing energy efficiency, product quality, and emissions control. While topping-only units are virtually obsolete, a few mid-complexity hydro-skimming facilities still exist, often servicing local or regional fuel needs. Japan’s refineries now also serve as hubs for co-processing renewable feedstocks, with growing integration of bio-based components like SAF and hydrogenated vegetable oils. Research into ammonia co-firing and green hydrogen utilization is underway, with refineries exploring ways to convert legacy infrastructure for low-carbon production. These modernization efforts align with Japan’s national targets to achieve carbon neutrality by 2050.

Considered in this report
• Historic Year: 2019
• Base year: 2024
• Estimated year: 2025
• Forecast year: 2030

Aspects covered in this report
• Oil Refining Market with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Fule Type
• Gasoline
• Diesel/Gasoil
• Jet Fuel
• LPG
• Fuel Oil
• Others (Lubricants, Asphalt)

By Application
• Road Transportation
• Aviation
• Marine Bunker
• Petrochemical Industry
• Residential & Commercial
• Electricity Generation
• Others (Rail & Domestic Waterways, Agriculture)

By Feedstock
• Crude Oil
• Natural Gas Liquids (NGLs)
• Biomass
• Others (Coal Tar, etc.)

By Complexity Type
• Topping
• Hydro-skimming
• Conversion
• Deep Conversion
• Others Show more