Japan's largest refiner Eneos lowered its operating profit forecast for its energy business for the April 2022-March 2023 fiscal year, mainly because of problems at its ageing refineries.

Eneos forecasts a loss of ¥50bn in its energy business, including oil products, petrochemicals, electric power and materials, for the 2022-23 fiscal year, the company said in its results announcement for April-December. Eneos revised its forecast down sharply from the ¥70bn profit estimated in November last year. Unplanned shutdowns caused by technical issues and an earthquake lowered refinery runs, curbing profit, Eneos said.

The company had originally targeted to maintain its refinery runs at 90pc in 2022-23, excluding planned turnarounds. But runs were below the target during April-December, at 78pc in the first quarter, 77pc in the second quarter and 79pc in the third.

Problems at Eneos' 145,000 b/d Sendai plant appear to be the main reason for the lower runs. The company was forced to shut the Sendai after a 7.4 magnitude earthquake hit on 16 March 2022. The unplanned shutdown brought on a sequence of technical issues. The Sendai resumed operations on 25 April, but was shut again on 9 May and remained closed until 1 July. Operations at the plant were also disrupted by two earthquakes in February and May 2021, and it was shut over June-July 2021 for maintenance.

The company's 120,000 b/d crude distillation unit (CDU) at its Marifu plant and the 77,000 b/d No.3 CDU at its Kawasaki plant also faced technical issues during November-December, while the 150,000 b/d Negishi refinery was forced to shut in October because of a fire. Eneos said that issues occurred also because of declining availability of experienced engineers, as well as a lack of manpower for inspections and maintenances.

Eneos operates 10 refineries with a total capacity of 1.7mn b/d that accounts for over 52pc of Japan's overall capacity of 3.3mn b/d. All 10 plants started their refining operations during 1941-1971, and the company will scrap the oldest Wakayama plant by October this year. The Sendai is Eneos' newest refinery.

Fellow refiners Idemitsu and Cosmo Oil also said in their third quarter results that technical problems pressured their profits from oil, and revised down their profit estimates for 2022-23. Profit forecasts have also been pressured by the time lag between the purchase and processing of crude.

Japan's major oil firms have been under pressure to cut their refining capacities because of a 2-3pc/yr decline in domestic oil products demand. Ageing plants with technical issues could accelerate refinery consolidation in the country.