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2 Oil-hungry Japan looks to other
sources By Hisane Masaki
TOKYO - After decades of struggling to
reduce its excessively heavy reliance on the
Middle East for its crude oil, Japan imported 2%
less of the commodity from the region in 2006.
Does this herald a lasting change in the nation's
oil-import structure or represent just a
statistical quirk?
Resource-poor Japan's
dependence on crude oil from the Middle East
declined for the first time in four years year on
year in 2006 - albeit by a paltry percentage -
amid increased imports from the
rest
of the world, especially Russia and Africa.
Japan's total 2006 crude-oil imports fell
0.8% from 2005 to 1.53 billion barrels, or 4.19
million barrels a day, after rising 0.7% in 2005,
according to figures from the Natural Resources
and Energy Agency, which is affiliated with the
Ministry of Economy, Trade and Industry (METI).
What is more noteworthy is that although
the ratio of imports from the Middle East to the
total had risen above 90% for the first time in 37
years in 2005, the percentage declined 1 point to
89.2% in 2006 from 90.2% in 2005. The Middle East
oil-dependence rate for December - the latest
month for which figures are available - was even
lower, at 88.6%.
This in itself must be
good news for Japan, which has striven for decades
to reduce its dependence on oil from the volatile
Middle East and thereby ensure stable supplies by
diversifying oil sources. Japan imports almost all
of its oil, and is the world's third-largest oil
consumer after the United States and China.
After switching some of its imports to
those from outside the Middle East, such as
Indonesia, Mexico and China, Japan saw its
dependence on Middle Eastern oil decline to 67.9%
in 1987 from more than 80% in 1972, the year
before the first oil crisis shook the world and
sent panicked Japanese consumers rushing to stock
up on toilet tissue and detergent, among other
goods, amid rumors that they would run out of
stock.
As a result of the first oil
crisis, the Japanese economy experienced its first
negative growth since the end of World War II in
1974 after years of high-flying growth from the
early 1960s. Japan survived the two oil crises of
the 1970s through strenuous energy-saving efforts
and technological innovations. The oil crises are
commonly remembered as "oil shocks" by Japanese
people.
But oil imports from China,
Indonesia and Mexico began to shrink around 1990
as those countries kept more of their oil for
domestic consumption to meet increased demand at
home, rather than for export. As a result, Japan's
dependence on Middle Eastern oil began to climb
again.
Japan's 2006 overall oil-import
figures show signs of possible structural changes
in the nation's oil sources in the medium and long
terms.
Oil suppliers in the Middle East
cut back on production after world oil prices hit
nominal all-time highs of more than US$78 a barrel
last July, and Japan's monthly imports from the
region declined by about 10% year on year in the
second half of 2006. As a result, Japan's
dependence on oil from the region declined for
four months in a row on a year-on-year basis in
December, at 88.6% of the nation's oil-import
total, down 3.2 percentage points from the same
month of the previous year.
On the other
hand, Japan's imports from other regions,
especially Russia and Africa, began to increase.
To be sure, the percentages of imports from Russia
and Africa in Japan's total imports - 0.7% and
4.4% respectively - pale before those from the
Middle East. But they are expected to rise this
year and beyond, as Japanese oil companies are
revving up their drive to diversify sources.
Japan's oil imports from Russia rose 3.5%
to a little more than 11 million barrels in 2006,
while those from Africa surged 30.5% to nearly 70
million barrels.
Nippon Oil Corp and other
Japanese oil wholesalers have begun to purchase
crude oil from the Sakhalin-1 project in Russia's
Far East. The project, which is managed by an
international consortium led by US oil giant
ExxonMobil Corp, began oil shipments last October.
Other consortium participants include Tokyo-based
Sakhalin Oil and Gas Development Co, owned by the
Japanese government and private sector, and
Russia's state-owned oil firm Rosneft.
The
growth in imports from Africa was led by robustly
increased imports from Sudan and Angola. Japan
imported 39 million barrels of oil from Sudan last
year, up 36% from 2005, and a little more than 11
million barrels from Angola, up a whopping
1,172.2%. Imports from Sudan almost equal those
from Indonesia and far exceed those from Oman.
Central Asia and the Caspian Sea are also
regions Japan is eyeing with growing eagerness as
promising suppliers. Idemitsu Kosan Co, Japan's
second-biggest refiner, bought a million barrels
of crude oil from Azerbaijan last month, becoming
the first Japanese fuel producer to import crude
oil from that country.
Idemitsu purchased
1 million barrels of Azerbaijani light-grade crude
oil from Inpex Holdings Inc, Japan's biggest oil
explorer, for March delivery to the Aichi refinery
in central Japan. The Azerbaijani crude will be
loaded from the BP Plc-led ACG project in
Azerbaijan, in which Inpex Holdings has a 10%
stake. The Azerbaijani light crude oil will be
carried through the Baku-Tbilisi-Ceyhan pipeline
to Turkey's Ceyhan port, from where it will be
loaded on to a ship for delivery to Japan.
Saudi Arabia, the United Arab Emirates and
Iran remained Japan's three biggest oil suppliers
last year. Saudi Arabia shipped 458 million
barrels to Japan, or 30% of Japan's import total.
The UAE shipped 387 million barrels, or 25.4% of
Japan's import total. Iran came third, exporting
176 million barrels, or 11.5% of the total.
But Japan's oil imports from Iran
plummeted 16.9% in 2006 from the previous year
amid growing international tensions over the
Persian Gulf nation's nuclear programs. If this
declining trend continues, Iran will very likely
cede third position as Japan's oil supplier to
Qatar this year. Qatar shipped 156 million barrels
to Japan in 2006, or 10.2% of Japan's import
total.
Japan agreed last autumn to give up
its controlling interest in the $2 billion
development of Iran's massive Azadegan oilfield
amid tensions over Tehran's nuclear program. Inpex
Holdings Inc, Japan's leading energy developer
fully backed by the government, reduced its stake
in the southwestern oilfield from 75% to 10%.
Officially, Inpex Holdings maintained that the
deal went awry because of insufficient efforts by
Tehran to de-mine the project area on the border
with Iraq, but the firm was widely believed to
have reduced its stake in the oil project in the
face of formidable US pressure on Japan.
With the largest concentration of reserves
in the world, the Persian Gulf region is likely to
continue to play a pivotal role as Japan's main
supplier. Moreover, although it is difficult to
predict with any certainty, Iraq could also
eventually be a major supplier to Japan, and Tokyo
is eager to get its hands on at least some
of
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