Japan to release crude oil from national reserve

Japan plans to sell Khafji and Hout crude from its strategic oil reserves, in the country's second co-ordinated Strategic Petroleum Reserve (SPR) release with oil-consuming countries following December.

Japan's ministry of economy, trade and industry (Meti) today issued two tenders to sell around 150,000 kilolitres (944,000 bl) of Khafji crude and around 110,000 kl (692,000 bl) of Hout. Eneos' Kiire oil terminal in Kagoshima prefecture in southern Japan will supply the Khafji, while the Tomakomai-Tobu national stockpiling base on Hokkaido island will supply Hout.

Khafji crude should load from Kiire during 20 April-31 July in up to two batches. Hout crude should load from Tomakomai-Tobu in one batch between 20 April-20 August, except for 1 May-20 June. Offers must be submitted by 9 March, with the tender results finalised on the same day.

Meti announced in November that Tokyo will release several million barrels of crude oil from the country's national reserve jointly with the US, China, India, South Korea and the UK, bringing forward its scheduled sales.

Japan has been requesting oil exporters increase their production to ease soaring global oil prices to mitigate the impact on domestic oil product prices. But Meti on 27 January started providing subsidies to the country's oil suppliers, pressured by rising crude oil prices. The subsidies aim to support the country's industries such as transport, agriculture and fishery as well as household consumers.

Meti announced today that the subsidy provision from 17-23 February will be ¥5/l ($6.87/bl), maintaining maximum funding of ¥5/l for a second consecutive week. The subsidy started ¥3.40/l during 27 January-2 February, and was raised to ¥3.70/l the next week before rising to ¥5/l.

The ¥5/l subsidy was set after Japan's average gasoline retail prices increased to ¥171.40/l, up from ¥171.20/l last week. These marked the first time since September 2008 that average prices exceeded ¥171/l.

By Maiko Nakashima