Oil refiner Idemitsu Kosan has decided to close its refinery in the Yamaguchi Prefecture in Japan by the end of March 2024.

The move to close the 53-year old plant comes as the company foresees reduced gasoline demand due to increasing demand for more fuel-efficient vehicles, in line with global trends towards decarbonisation.

The refinery is operated by Idemitsu’s affiliate Seibu Oil Company.

As part of the plan, the Japanese petroleum supplier will increase its stake in Seibu Oil from 38% to 66.9% and make it a wholly owned subsidiary.

Idemitsu also plans to terminate its product purchase agreement with Seibu Oil.

The Japanese company will purchase an 11% interest from chemicals firm Ube, a 10.79% stake from utility Chugoku Electric Power, a 5% interest from shipping company Mitsui OSK Line, and 2.11% from minor shareholders.

In a press statement, Idemitsu said: “In light of this evolving operating environment, the company determined that a revamping of the Idemitsu group’s manufacturing and supply framework is inevitable and that making Seibu Oil a subsidiary of the Company, terminating the product purchase agreement, and terminating refinery operations at Yamaguchi Refinery is the best course of action for Idemitsu.”

Employing 450 people, the refinery has a crude oil refining capacity of 120,000 barrels per day. It accounts for 13% of the total refining capacity of Idemitsu.

Idemitsu is considering new uses for the refinery site, which will generate solar power and continuing to store oil, reported Bloomberg News.