16/04/26
Japan offers $10bn to secure Asian oil supplies
Japan offers $10bn to secure Asian oil supplies
Osaka, 16 April (Argus) — Japan plans to provide around $10bn in financial aid
to help Asian countries secure crude oil supplies and ensure stable shipments of
petroleum-derived products to Japan, following disruptions to crude and oil
product flows from the Middle East. Tokyo will establish a $10bn financial
framework to help Asian partners procure alternative crude supplies, such as
from the US, and to strengthen supply chain resilience, prime minister Sanae
Takaichi said on 15 April. She warned that fuel shortages in Asia could disrupt
Japan's access to essential goods, particularly medical supplies such as
dialysis equipment and surgical materials, from the region, with serious
consequences for the economy and society. The $10bn support would be equivalent
to up to about 1.2bn bl of crude, or roughly one year's worth of imports for
Asean countries, Takaichi said. The funding would help fill gaps in the
financial capacity or creditworthiness required for crude procurement, even
under normal market conditions, she added. Japan does not aims to supply oil to
countries hit by Middle East tensions, but to work with Asian partners to build
resilient energy and critical minerals supply chains. Japan has not faced a
severe domestic crude oil supply shortage, supported by sufficient stockpiles
and alternative procurement options such as imports from the US. Overall
inventories, including national, private and joint stockpiles, stood at about
221 days of domestic demand as of 13 April, according to preliminary estimates
from the trade and industry ministry Meti. Japan's petroleum reserves are
primarily intended to meet domestic demand , although the government has not
ruled out for the possibility of exporting any surplus supplies. The new
partnership with Asia does not involve reallocating Japan's strategic petroleum
reserves, and it will have no adverse impact whatsoever on domestic supply and
demand, Takaichi said. The financial package will not be limited to procuring
alternative crude oil and petroleum products, but will also be used for other
purchases, including the construction of oil storage systems and infrastructure
to expand crude reserves across Asia, as well as energy diversification into
LNG, biofuels, next-generation solar and nuclear power, and critical minerals.
Details on the allocation and duration of the financial support have yet to be
determined, a foreign ministry official told Argus . Tokyo will not draw on
additional budget funds for the initiative, instead using existing resources,
mainly through state-owned Japan Bank for International Co-operation (JBIC),
Nippon Export and Investment Insurance (NEXI) and Japan International
Corporation Agency (JICA), the official said. Takaichi unveiled the financial
plan following the Japan-led Asia Zero Emission Community (Azec) Plus meeting,
held online on 15 April, to discuss countermeasures against supply disruptions
affecting shipments through the strait of Hormuz, which have had the greatest
impact on Asian counties. Leaders from 11 Azec member states participated, along
with representatives from South Korea, East Timor, India, Sri Lanka and
Bangladesh. By Motoko Hasegawa Send comments and request more information at
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