Japan's Idemitsu returns to fossil fuel focus in new medium-term plan

TOKYO, May 12 : Japanese oil refiner Idemitsu Kosan announced a new fossil-fuel-focused medium-term plan on Tuesday with plans to invest a total of 1.8 trillion yen ($11.4 billion), of which 830 billion yen will be allocated to existing businesses. The move marks a significant shift from Idemitsu's previous plan, which had been aiming to cut fossil fuel assets and generate more than 50 per cent of profit from non-fossil fuel businesses by fiscal 2030 as part of a broader energy transition strategy. "The previous plan was based on the assumption that fossil fuel consumption would decline, but the long-term outlook has become increasingly uncertain," said president Noriaki Sakai. Before the Iran war began in February, Japan relied on the Middle East for 95 per cent of its crude imports. The effective closure of the Strait of Hormuz has forced it to seek alternatives.  "We aim to strengthen our existing businesses, such as fuel oil, whose social importance is being increasingly recognised," Sakai told a press conference, adding that Idemitsu had scrapped an earlier target to cut domestic refinery capacity. Across the global energy sector, companies that had reoriented their portfolios to address climate change are increasingly refocusing on oil and gas, where returns have become more attractive following a rebound in fossil fuel prices from COVID-19 pandemic-era lows. The remaining spending for fiscal 2026 to 2030 will mainly target growth and decarbonisation, Idemitsu said, including expanded global operations in upstream natural gas, liquefied natural gas and LNG trading businesses. Idemitsu is targeting pretax profit, excluding financial expenses, of 360 billion yen in fiscal 2030, versus 244 billion yen in operating profit and equity-method earnings in fiscal 2025, which ended in March. Sakai said Idemitsu is securing crude from North and South America, while also procuring oil from Saudi Arabia and the United Arab Emirates through routes that bypass the Strait. "We are not facing extreme difficulties in securing alternative supplies," he said. To ensure a stable domestic supply, Idemitsu is prioritising petroleum product shipments to Japan even if overseas markets offer higher margins, Sakai said, adding that the 4 million barrels of crude procured for Vietnam's Nghi Son Refinery were an exception made at the government's request. ($1 = 157.5800 yen)