Page 2 of 3 New energy to Japan's
diplomacy By Hisane Masaki
negotiations. Tokyo wants the proposed FTA
to contain the GCC's pledge to ensure stable
energy supplies to Japan.
In Riyadh, Abe
proposed to King Abdullah to let Japan's largest
oil supplier use part of the state-owned
oil-storage tanks in the southernmost Japanese
prefecture of Okinawa in exchange for a
preferential right to purchase the oil reserves
there in case of
emergency. Abdullah agreed
that Saudi Arabia will examine the plan through
ministerial-level and working-level talks.
The oil-storage plan is designed to deepen
Japan's interdependent relationship with Saudi
Arabia and ensure stable oil supplies. Saudi
Arabia, as well as Japan, is expected to benefit
from the proposed Saudi use of Japanese storage
tanks, which would enable the Arab kingdom to set
a new commercial foothold in Asia. At present,
Tokyo has stockpiles of about 5.25 million
kiloliters of oil - an amount equivalent to 10
days of the nation's consumption - at the
oil-storage facilities on Okinawa prefecture's
Henza Island.
The Japanese and Saudi
leaders issued a joint statement in which the two
countries agree to strengthen high-level political
dialogue, including between their foreign
ministers. The joint statement spelled out the
creation of a joint task force comprising
representatives from the two governments and
private sectors to expand investment, particularly
in the fields of automobiles, electronics and
construction materials. Both sides also emphasized
the importance of an early conclusion of
negotiations on liberalization, promotion and
protection of investments between the two
countries.
Only three days after the talks
between Abe and Saudi leaders, including King
Abdullah, Japan and Saudi Arabia held a one-day
ministerial meeting in Riyadh and agreed to step
up bilateral economic cooperation in such fields
as energy and infrastructure development. Japanese
Trade Minister Amari attended.
Japan
specifically proposed accepting Saudi experts for
training programs in Japan for oil exploration and
development technologies. Japan also proposed
helping Saudi Arabia develop expertise in the
field of trade and investment, as well as
extending financial support for the development of
Saudi infrastructure.
In Abu Dhabi, Abe
met with UAE President Khalifa bin Zayed Al
Nahyan. The two agreed to launch a ministerial
"Japan-UAE Joint Economic Committee" to promote
bilateral economic relations, particularly in the
investment, business-environment and energy
fields. The UAE is Japan's second-largest oil
supplier.
Kuwaiti leaders expressed to Abe
their desire to start negotiations on promotion
and mutual protection of investments between the
two countries.
In Doha, Abe and Qatari
leaders agreed to launch preparatory talks for
negotiations on a bilateral investment treaty.
Qatar is Japan's fourth-biggest oil supplier,
after Saudi Arabia, the UAE and Iran. Qatar is
also Japan's fourth-largest LNG supplier after
Indonesia, Malaysia and Australia.
Saudi
Arabia, the UAE and Iran remained Japan's three
biggest oil suppliers in 2006. Saudi Arabia
shipped 458 million barrels, or 30.0% of Japan's
import total. The UAE shipped 387 million barrels,
25.4% of Japan's import total. Iran came third,
exporting 176 million barrels, 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 last year, 10.2% of the country's
import total.
Japan agreed last autumn to
give up its controlling interest in the US$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%.
Flush with oil money amid
high prices for the fuel, the economies of
oil-producing countries in the Middle East are
booming. Japan's exports of steel and general
machinery to those countries are on the rise,
reflecting strong capital investments there. While
Japanese energy companies want to secure stable
supplies from the region, other companies,
including financial institutions, are eager to
cash in on the booming economies and oil money.
For their part, the GCC nations want to
see a further inflow of Japanese investment and
cutting-edge technology, not only into the oil
sector but also in a wide range of other sectors,
especially manufacturing, to help them reduce
their heavy dependence on oil and increase
employment opportunities for the swelling
population.
Meanwhile, the
government-affiliated Japan Bank for International
Cooperation (JBIC) signed an agreement with the
UAE's Abu Dhabi National Oil Co (ADNOC), which is
wholly owned by the Abu Dhabi government, on
Sunday to establish a comprehensive and strategic
partnership.
JBIC is expected to lend $1
billion to ADNOC by the end of this year and
several more billion dollars later to help the
Persian Gulf nation boost crude-oil production and
the economy in exchange for securing stable oil
supplies. JBIC also signed a strategic partnership
agreement with the Dubai government on Monday to
help build Dubai's infrastructure and improve the
business environment for Japanese firms. Dubai,
one of the seven emirates that make up the UAE, is
the financial and commercial hub of the Middle
East.
Japan's higher political
profile To be sure, oil topped Abe's
agenda during his Middle East tour. But he also
apparently wanted to raise Japan's political
profile in the region. Abe and Middle East leaders
discussed Iraq, the
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