BMI View: While Japan will continue to remain a global refining powerhouse, aggressive cutbacks in refining capacity and a gradual shift away from oil-based fuels will weigh on Japan's refined fuels exports in the long run. Japan will remain the largest LNG buyer in the world through to 2026. This quarter we increased our gas consumption outlook throughout our forecast period due to an increase in gas power generation forecasts by our Power Team. Indeed, a slowing nuclear revival, renewables investment and heightened risks for coal project cancellations allow gas to remain dominant in the Japanese power mix.
Latest Updates And Key Forecasts
Japan's refining capacity will fall from 3.8mn b/d in 2016 to 3.3mn b/d in 2020, with further risks to the downside as government-set efficiency targets and adverse market conditions encourage consolidation in the sector and push inefficient refiners out of the market. While the country will remain a major producer of refined fuels through to 2026, overall fuels output will fall in tandem with diminishing capacity.