Japan's Cosmo Energy to keep Middle East crude focus despite Iran war

TOKYO, June 18 : Japan's Cosmo Energy Holdings will maintain its focus on crude procurement and upstream investments in the Middle East despite the Iran war, citing the region's cost-competitiveness and suitability of its crude for Cosmo's refineries, its CEO said on Thursday.

The country's third-largest oil refiner sourced about 95 per cent of its crude from the region before the war started on February 28, in line with larger domestic peers, leaving it exposed to disruption and prompting a search for alternative supplies.

"From a security perspective, we recognise that 95 per cent is a problem," Chief Executive Shigeru Yamada told a news conference.

"But our focus should be on reducing reliance on the Strait of Hormuz, rather than on the Middle East itself," he said, highlighting the economic advantages of Middle Eastern crude.

Yamada said Cosmo would step up efforts to diversify supply sources during emergencies and consider measures to enable its refineries to process a broader range of crude grades.

Under a new long-term strategy through 2035, Cosmo plans to expand oil production in Abu Dhabi by maximising output from existing fields, including the Hail, while developing new projects. The company is targeting crude output of 51,000 barrels per day by 2028 from 43,000 bpd now.

It will also explore expanding natural gas development, building on its ties with the United Arab Emirates.

Over the next decade, Cosmo plans to invest 300 billion yen ($1.86 billion) each in oil and upstream operations and 200 billion yen in power supply chains, targeting recurring profit of 250 billion yen in fiscal 2035, up from 165.7 billion yen in fiscal 2025.

Seeking growth beyond oil, Cosmo aims to expand into materials used in semiconductors and electronic components, where demand is expected to grow with artificial intelligence and digitalisation. It also plans to develop lithium for batteries.

In power generation, the company is considering entry into liquefied natural gas-fired electricity generation.

($1 = 160.8800 yen)