Dec. 1 (Bloomberg) -- Nansei Sekiyu K.K., a Japanese refiner majority owned by Brazil’s state oil company, Petroleo Brasileiro SA, may delay a proposed expansion of its Okinawa refinery because of the drop in oil prices and the global credit crisis.

The company is reviewing its plans and will announce a decision in January, spokesman Nelson Toyomura said by phone from Tokyo today. Petrobras and partner Sumitomo Corp. said in November last year they would upgrade the 100,000 barrel-a-day Nishihara refinery by 2010.

Petrobras has been forced to review the project after crude oil in New York fell to a third of its July peak of $147.27 a barrel because of the dim global economic outlook. Under the expansion plan, the Okinawa plant was to become Petrobras’ Asian hub for refining Brazilian crude for sale to China and elsewhere in the region.

“We won’t cancel the upgrading project,” Toyomura said. “It’s possible we may have some delay.”

Petrobras in April purchased an 87.5 percent stake in Nansei Sekiyu from Exxon Mobil Corp.’s Japanese unit, TonenGeneral Sekiyu K.K.. It was the Brazilian company’s first entry into the Japanese market, the world’s third-biggest oil consumer.

Separately, Nansei Sekiyu plans to shut the Nishihara plant in May for regular maintenance, Toyomura said.

To contact the reporter on this story: Michio Nakayama in Tokyo at Mnakayama4@bloomberg.net; Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.

Last Updated: December 1, 2008 01:19 EST