Japan's Cosmo energy to continue focusing on Middle East crude despite Iran War

The CEO of Japan's Cosmo Holdings said that despite the Iran War, the company will continue to focus on crude procurement in the Middle East and upstream investment, citing its cost-competitiveness, and the suitability of the crude produced there for Cosmo's refineries.

As with its larger counterparts, the country's third largest oil refiner had sourced around 95% of crude from the area before the war began on February 28. This left it vulnerable to disruptions and prompted a search for alternatives.

Shigeru Yamada, Chief Executive Officer of Shigeru Corporation, said at a press conference: "From the perspective of security, we recognize that 95% are a problem."

He said that the focus should be on decreasing reliance on Middle Eastern crude oil, rather than the Middle East.

Yamada stated that Cosmo would increase efforts to diversify its supply sources in times of emergency and consider measures to enable its refineries process a wider range of crude grades.

Cosmo's new long-term plan, which will run through 2035, aims to increase oil production in Abu Dhabi, by maximising the output of existing fields including Hail and developing new projects. The company aims to increase crude production from 43,000 barrels per day now to 51,000 by 2028.

The company will also look at expanding its natural gas development and building on its relationship with the United Arab Emirates.

Cosmo will invest 300 billion yen each in upstream and oil operations, and 200 billion in power supply chains over the next decade. The company aims to achieve a recurring profit of 250 billion in fiscal year 2035. This is up from 165.7 billion in fiscal year 2025.

Cosmo, in its quest for growth, aims to diversify beyond oil into materials used to make?semiconductors, electronic components and other products, where the demand is expected to increase with artificial intelligence and digitalisation. It plans to also develop lithium for battery.

The company is looking at liquified natural gas as a fuel for electricity generation. ($1 = 160.8800 Japanese Yen) (Reporting and editing by Emelia Sithole Matarise; Yuka Obayashi)

(source: Reuters)