Japanese trading house Mitsubishi Corp said it is entering Australia's diesel market by building a $103 million gas oil import terminal to tap growing demand and as a closure of several refineries has squeezed domestic supply of the fuel.
Mitsubishi's move comes as Australia is turning into a playground for global oil traders, who are snapping up storage tanks and terminals as they bet on it becoming Asia's top importer of oil products, with demand rising and old, inefficient refineries closing.
"The terminal will be the foundation for Mitsubishi to launch a diesel fuel import, sales and distribution business in Australia which it expects to show robust growth on the back of increasing demand in energy, resource, transport and industrial sectors," it said in a statement on Tuesday.
Comprising pipelines, three 170,000-barrel-tanks, and lorry gantries among others, the terminal will be constructed at Port Bonython in South Australia and is set to start operations in April-June 2016. This is the first time that a Japanese firm would own its oil terminal in the country, Mitsubishi said.
The terminal will have an annual diesel shipping capacity of 5.7 million barrels (900,000 kilolitres), a company spokeswoman said.
Diesel use in South Australia, the main demand centre, is projected to grow to 12.6-15.7 million barrels (2 million to 2.5 million kl) by around 2020, from 1.5 million kl in the year ended in June 2013, she added.
Mitsubishi will procure diesel from Asia including Japan, the Middle East and North America, she added.
(By Osamu Tsukimori)