The Japanese government could consider an additional oil reserves release, if the current oil supply disruption persists because of the US-Israel war with Iran, the Petroleum Association of Japan (PAJ) and the trade and industry ministry Meti said today.
"While we will also see how alternative crude securing progresses, we are keeping in mind that we may release additional oil reserves, if necessary, even after the national reserves release," a Meti official said. "We are working on necessary preparations for that."
Japan has already lowered the oil reserves mandate on domestic refiners from 70 days equivalent to 55 days until 15 April, which has allowed domestic refiners to use 15 days equivalent volumes from their oil reserves. Tokyo has also decided to release one-month equivalent of crude volumes from national oil reserves, aiming to cover the requirements for April. Total released volumes from national and private-held reserves amount to around 80mn bl, Meti said.
For these first rounds of national oil stockpiles release, each domestic refiner has submitted which and how much crude they need from national oil reserves, and this process has almost been completed, PAJ president Shunichi Kito said on 23 March. "But if the situation in Iran may persist going forward, another release of oil reserves will become necessary." The government shares this view as well, a PAJ official added.
An additional release could cover requirements for May onwards, Kito said. The Japanese government will decide the scale of released volumes, but it could be similar to the first round, he reiterated.
Japan has a 241-days equivalent of oil reserves as of 20 March, according to preliminary data from Meti. The country has 89 days of private-held oil reserves, 146 days of national reserves and 6 days of joint stockpiles with oil-producing countries.
Alternative sources
Japanese refiners are exploring the possibility of securing alternative crude and sending vessels to alternative sources, Kito said, adding that North America is an option while Central and South America including Ecuador, Colombia as well as Mexico also have potential.
Japan has a waiver from the US and EU to procure Russian crude only from the Sakhalin-2 project in the far east. Japan imports LNG from this project, which also produces crude oil as a by-product. Japanese refiners are not considering importing Russian crude other than from Sakhalin-2 for now, Kito said, while adding that Iranian crude is not under consideration either.
