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4 Japan banks on energy,
environment By Hisane Masaki
TOKYO - The government-affiliated Japan
Bank for International Cooperation (JBIC), one of
the world's biggest international financial
institutions, is revving up its energy- and
environment-related business activities,
apparently reflecting growing government concerns
over energy supplies and global warming.
Resource-poor Japan is pumping no small
public financial support into its drive for oil,
gas and other energy resources abroad, in a
desperate bid to ensure
national energy security amid stubbornly high oil
prices and also in response to the intensifying
global rush for resources, led by China and India.
The public financial support takes the
form of investment, loans and loan-guarantee and
investment insurance. It is provided mainly
through government-affiliated financial
institutions, including JBIC.
Ensuring
stable oil supplies is a matter of life or death
for the world's second-largest economy. Japan
imports almost all of its oil, nearly 90% of which
comes from the volatile Middle East. Japan also
buys almost all of its natural gas from abroad,
making it the world's largest importer of
liquefied natural gas (LNG).
Meanwhile,
JBIC is rushing to sign partnership agreements
with many developing countries on the so-called
Clean Development Mechanism (CDM) projects. In
recent months alone, JBIC has signed such
agreements with many countries, including
Singapore, El Salvador, Sri Lanka, Malaysia,
Thailand, Indonesia, India and Brazil.
The
CDM partnership agreements are aimed at helping
Japanese firms participate in CDM projects and
thereby acquire emission rights for greenhouse
gases such as carbon dioxide. CDM is a key
mechanism designed to help industrialized
countries achieve their greenhouse-gas reduction
targets under the Kyoto Protocol on curbing global
warming.
JBIC is among the world's largest
international financial institutions. Its
outstanding loan and other financing total 19.5
trillion yen (nearly US$170 billion) and its
outstanding guarantees total a little over a
trillion yen.
Energy security
concerns Highly alarmed by stubbornly high
global oil prices and the red-hot global rush for
energy resources, led by China and India, Japan
released in late May a new strategy aimed at
ensuring stable energy-resource supplies in the
long term.
The new national energy
strategy calls for, among other things,
strengthening relations with resource-rich
countries through such measures as official
development assistance (ODA) and free-trade
agreements. It also calls for securing energy
resources abroad through the fostering of more
powerful domestic energy companies with the
ultimate goal of boosting the ratio of "Hinomaru
oil", or oil developed and imported through
domestic producers, from the current 15% to 40% by
2030. Hinomaru is Japan's national Rising Sun
flag.
To achieve the numerical target for
"Hinomaru oil", the new national energy strategy
stresses the importance of "drastically
strengthening the supply of risk money" related to
the exploration and development of overseas oil
and natural-gas reserves by domestic development
companies. In this connection, the document
specifically emphasizes the need for Japan Oil,
Natural Gas and Metals Corp and other
government-affiliated organizations to play the
role of an effective risk-money supplier.
But Japan has suffered a spate of setbacks
in its energy-security strategy recently.
In September, Japan gave up its
controlling interest in the $2 billion development
of Iran's massive Azadegan oilfield amid tensions
over Tehran's nuclear program. Indonesia, Japan's
current No 1 supplier of LNG, is considering
cutting in half shipments to the country from 2010
- when long-term contracts expire - to boost the
availability of natural gas for domestic
industries amid decreasing oil and natural-gas
production at home. At the same time, Japan and
Russia remain at odds over the Sakhalin-2 oil and
gas project in Russia's Far East.
Comprehensive partnership
agreements Since the current fiscal year
began in April, JBIC has so far signed
comprehensive partnership agreements with South
Africa, Indonesia, Brazil, Oman, Qatar, Brunei,
Uzbekistan and Kazakhstan in the hopes of ensuring
stable supplies.
South Africa is rich in
resources such as gold, platinum and diamonds.
Indonesia is the biggest supplier of LNG to Japan,
accounting for 25% of the 58 million tons Japan
purchased from abroad in 2005. Brazil is a
promising supplier of ethanol. Oman and Qatar are
members of the six-nation Gulf Cooperation
Council, which also includes Saudi Arabia, the
United Arab Emirates, Bahrain and Kuwait. The GCC
accounts for more than 70% of Japanese crude-oil
imports. Brunei is also an oil and gas producer.
Uzbekistan and Kazakhstan are rich in
resources, especially uranium, as well as oil and
gas.
"JBIC is making efforts to strengthen
relations with the governments of oil- and
gas-producing countries, as well as state-owned
oil and gas companies, which play a crucial role
as a supply source of energy resources for Japan,"
JBIC said. "JBIC is
