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.
