The Japanese government has moved to ensure stable supplies of oil products, some of which have faced distribution bottlenecks, while noting that overall fuel supply remains sufficient nationwide despite disruptions to Middle East crude flows.
Concerns over securing supplies of oil products are growing among a wide range of industries in Japan, as bottlenecks emerge at the distribution stage. Heavy fuel oil and diesel are no longer as readily procured as they had been in the past, an official at the trade and industry ministry Meti said on 9 April.
The government has already requested refiners and importers to ensure stable supplies regardless of whether customers are affiliated or not and regardless of whether business relationships exist, Meti said after a task force meeting held on 9 April to ensure the stable supply of critical goods against a backdrop of tensions in the Middle East.
Tokyo has asked major refiners, including Eneos, Idemitsu and Cosmo Oil, to conduct direct sales to task force-designated critical facilities, including those in the medical, transportation, public services, agriculture, fisheries, livestock and essential goods manufacturing sectors. Refiners, as well as wholesale distributors, should supply volumes at levels equal to that of the same month a year earlier as a guideline, Tokyo said.
The government will not intervene with contract negotiations between refiners and consumers, the official said when Argus asked whether new agreements between refiners and consumers will follow existing terms including pricing and other conditions aside from volumes.
It remains unclear why the bottleneck has emerged, even though overall supply volumes across Japan should be sufficient, the official said. Meti is assessing the cause of the problem but has no plan to compile a report, as the government prioritises addressing the situation. The government will work to increase crude processing and expect refiners to strengthen their own response frameworks, the official said.
Japan sold 2.5mn b/d of refined products in February, before the onset of the Middle East conflict, according to the latest data from Meti. Sales of gasoil and fuel oil averaged 543,700 b/d and 282,000 b/d, respectively.
Japan sees no immediate risk of disruption to oil products in the domestic market, as it makes use of private-sector and government stockpiles and boosts alternative imports. Tokyo on 10 April decided to release an additional 20 days' worth of crude oil from its national reserves from early May, following earlier releases equivalent to 30 days from the national stockpile, 15 days from private stockpiles and six days under a joint stockpile programme with oil producing countries.
Japan has sufficient oil supplies to last beyond the end of this year, prime minister Sanae Takaichi said on 7 April.
In addition to petroleum products, the task force is also working to ease bottlenecks in petroleum-derived medical supplies and paint thinners.
