Interview with Yoshihiro Sato

Q1          What is your single biggest concern for 2016 and beyond

YS: My biggest concern is an unstable oil market/price.  We need to take an additional risk on changing inventory value.

Q2          Over the next five years what will be the key supply and demand trends shaping the industry

YS: Opportunities are a steady increase in oil demand in addition to production increase of value added products.  The refiners who have a flexibility of product quality, especially high quality products, and offsite facilities, tankage and shipping capability, have opportunities to supply these products at a high margin.   Chemical shift is also an opportunity for refiners to upgrade the molecules from refinery to the high-value products.

Q3          How can Asian refiners and petrochemical producers enhance their operational excellence and improve cost-efficiency

YS: Safe and stable refinery operation is a fundamental of our business. For that, reliability improvement is a key objective for refinery management. The approach of the risk based decision for the reliability improvement maintenance/investment is required.  Measures against facility aging are covered by a comprehensive reliability improvement system to apply a cross-functional and systematic approach in this area. All degradation factors of every piece of equipment in the refinery are identified, then calculate the life of the equipment and a proper measure before the end of the life is reached.

Constantly updating equipment strategies and keeping them comprehensive is very important for measures against aging.

Q4          How much of a challenge do current and future regulations provide

YS: Environmental regulations are the main threats for Asian refiners; quality enhancement of auto fuels, bio-fuel introduction and CO2 reduction.  As for quality enhancement, key elements are sulfur, benzene, olefins for gasoline, sulfur for diesel and sulfur for bunker fuel.   CO2 reduction may become the most serious issue for refiners in industrially advanced countries, because the amount of CO2 reduction will be larger than other countries.

Q5          What changes have you seen in refining as a result of the low oil prices

YS: Refining margins in Asia will move in a relatively low range as significant new refinery capacity additions come online in the Middle East and India, while the product surplus from these refineries will mainly impact the Asian product market.  Considering an excess capacity of refining facilities, a restructuring of refineries who have small capacity, low conversion refineries, stand-alone (no synergy with neighborhood) refineries or refineries with locational disadvantage, will be required in mid-term.  The remaining refineries need to seek synergy opportunities with chemical plants and/or neighboring companies and production of value added products for enhancing their competitiveness.

Q6          How important are energy costs and efficiency to refiners and petrochemical producers

YS: Energy management consists of two parts, Planning & Improvement and Sustainment & Execution.  Planning & Improvement which is driven by Technical develops energy improvement plans, new technology deployment and energy performance monitoring, especially, energy efficiency improvement is achieved through energy project pipelines. Sustainment & Execution which is driven by Operations is to sustain energy improvement activities and tighten energy performance targets. Workflow improvement and the introduction of an energy team will contribute sustainment as well as a monitoring tool introduction.  For idea generations, interaction with chemical plants is an opportunity area. In addition, energy cost reduction is a key focus, because energy cost equates to more than half of the total refining OPEX.  Maximising usage of low value fuels in refineries or importing from outside, such as Chemical plant.

Q7          Why do you think events such as ARTC Annual Meeting are important for the industry?  What do you find most beneficial about attending?

YS: Networking opportunity is the most important and valuable part of the meeting in addition to sharing of information and knowledge.

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