(June 11): Japan’s crude oil imports in July are expected to be fully sourced from areas that don’t require transit through the Strait of Hormuz, Prime Minister Sanae Takaichi said on Thursday, as she seeks to diversify the resource-poor nation’s energy supply ahead of the hot summer months.
“In July, we are expecting to secure from alternate sources about 100% of the average monthly amount,” said Takaichi at a Cabinet meeting held on Thursday afternoon. She added that crude oil imports from the US are expected to increase more than tenfold compared with a year earlier.
“Thanks to the efforts of all of those involved, it looks like we will be able to fully source all of our crude oil from areas outside of the Strait of Hormuz, despite having relied on the strait for over 90% of our oil previously,” she said.
The announcement comes as US and Iranian forces in the area clash despite a tenuous ceasefire. Tehran has said the strait would be closed to all types of vessels, while the US has said commercial ships are continuing to transit through the waterway.
Takaichi has spearheaded efforts since the outbreak of the war in Iran to diversify Japan’s supply of energy and chemical byproducts to smooth over any disruptions in the supply chain and keep the economy humming.
In early April, she said about half of crude oil imports in May would come from alternative sources. By late April, she said that about 60% of crude oil imports in May would be imported via routes that didn’t involve the strait.
See also: Oil climbs as fresh US strikes on Iran threaten fragile truce
Japan’s crude oil will now also be sourced from countries in Central and South America, Africa, as well as Asia, Takaichi said. Japan is also set to buy oil from Canada, and the first batch of crude oil from Mexico is set to arrive in July, she added.
While securing sufficient volumes of crude oil through alternative sourcing may provide some relief, challenges remain. Since Japanese refineries are configured to process primarily Middle Eastern crude oil, additional analysis and modifications may be required for the facilities to process oil from elsewhere, according to the industry group Petroleum Association of Japan (PAJ).
“This involves a considerable amount of work,” said PAJ president Shunichi Kito during a press conference in May, during which he also added that each refinery is likely analysing how to adapt its equipment.
See also: India boosts LNG buying to meet fertiliser, power requirements
Japanese refiners would have to “carefully examine what blending ratio and how different crude properties can be tolerated by existing equipment, and how far they can go without significantly impacting operating conditions”, he added.
Takaichi also said that she would raise oil supply issues at the upcoming Group of Seven meeting in France next week.
She said she would suggest support to further cooperation between Asian countries and the International Energy Agency to stockpile oil, and tout the need for oil-producing nations and oil-consuming nations to work together.
“It’s critical for vessels to be able to navigate all sea-lanes, including the Strait of Hormuz, safely and freely,” she said.
Uploaded by Tham Yek Lee
