To secure stable supply Japan should increase national oil stockpile

Aug 03, 1999 02:00 AM

Japan should increase the national oil stockpile by 5 mm kiloliters, 10 % of the current reserve, to secure stable supply in the face of increased demand from Asian countries, according to a report issued by the subcommittee of the Petroleum Council.
With Japan relying more Middle Eastern oil and demand from other Asian countries projected to increase, it may be difficult for Japan to maintain stable supplies without a bigger stockpile, the council subcommittee responsible to the Minister of International Trade and Industry said. But private sector stockpiles could be reduced gradually to help reduce the cost of maintaining reserves amid intensifying global competition.

In 1998, 86 % of Japan's oil imports came from the Middle East, 4 %age points higher than in 1972, just prior to the first oil crisis sparked by the 1973 Yom Kippur war. The report points out that Middle Eastern countries are plagued by social instability due to unemployment and other factors. And readiness to use the reserves must be maintained even after oil imports are substantially deregulated in 2001.
The report also recommends Japan eventually build up a 60 mm kiloliter stockpile, enough to meet national consumption for 90 days. But for now, a 55 mm kiloliter reserve target is acceptable in order to reduce the financial burden on the government.

Source: Asia Pulse via Iinoil
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