Amid Mideast instability, Japan pushing Asian neighbors to boost oil stockpiles
Amid Mideast instability, Japan pushing Asian neighbors to boost oil stockpiles
Natalie Obiko Pearson Associated Press Tokyo
Amid surging instability in the Middle East, Japan is pushing Asian neighbors to limit the region's vulnerability to a potential energy crisis by boosting oil stockpiles.
Worried by Asia's booming appetite for oil despite scarce inventories and its own heavy dependency on imports, resource- poor Japan has been trying to get others in the region to agree on a stockpiling system to protect against a fuel crisis.
"In the Asia region, many more countries don't have adequate stockpiles than those that do, so for the sake of security we are encouraging them to keep such reserves," said Masaki Ueno, an official at the Ministry of Economy, Trade and Industry's Agency for Natural Resources and Energy.
Japan will press the issue at an upcoming meeting of energy ministers from 10-member Association of Southeast Asian Nations, China, Japan and South Korea in Manila in June, he said.
Crude oil prices have been driven up by the threat of terrorism, political instability in the Middle East and deteriorating security in Iraq. This month, OPEC, which pumps about a third of the world's oil, also reduced its output target by 4 percent, threatening to cause prices to rise further.
METI Vice Minister Seiji Murata warned earlier this week that a continued rise in prices could hurt Japan's fledgling economic recovery - a view echoed on Wednesday by the International Monetary Fund's (IMF) chief economist.
Japan, along with the United States, is set to lead worldwide economic growth to "the best two years in over a decade," but an unexpected shock like a spike in oil prices could upset that rosy outlook, Raghuram Rajan said in presenting the latest version of the IMF's World Economic Outlook.
Japan, with almost no natural resources of its own, is heavily dependent on oil, which accounts for about 52 percent of its primary energy consumption. More than 80 percent of the country's oil comes from the Middle East.
"We are encouraging other countries to come to us for help in creating and managing stockpiles since we have knowledge in this area," said Ueno, noting that Japan's own experience in the 1973 oil crisis prompted it to set aside emergency reserves.
Japan and South Korea are the region's only oil importers with surplus supplies. Japan has about 160-days worth of reserves, but most other nations have little or no stockpiling system.
Japan is working with China, Thailand and Philippines. Those countries have plans for their own stockpiles, but progress has been slow even as energy consumption has soared.
Another official from METI's international division said China, which last year overtook Japan as the world's No. 2 oil consumer behind the United States, is of particular concern.
China's ravenous appetite for energy could drive up prices and drain supplies if an oil shock were to occur, and Japan considers proper stockpiling measures there crucial to Japan's own energy security, the official said on condition of anonymity.
Meanwhile, Japan is doing what it can to independently ensure a secure supply of oil.
In February, Japan signed a US$2 billion deal to develop Iran's Azadegan oil field, believed to be one of the largest in the Middle East, with reserves of up to 26 billion barrels. Tokyo penned the deal despite opposition by Washington, which feared the money could go to nuclear proliferation.
Japan is also competing with China for Russian oil. Tokyo has offered to finance exploration and development of East Siberia's oil reserves and built a pipeline from Siberia to a port on Russia's Pacific coast.