Japan Considers Releasing Oil Reserves
Posted on: Friday, 2 September 2005, 03:00 CDT
TOKYO - Japan is in talks with the International Energy Agency on measures to help ease petroleum supplies in the U.S. Gulf Coast area, including a possible release of some of Japan's strategic oil reserves, a trade ministry official said Friday.
"We've received a call from the IEA and started talks with them on measures for the oil supply disruption in the U.S.," a senior official at the Ministry of Economy, Trade and Industry said on condition of anonymity in accordance with ministry practice.
On Wednesday, the IEA began consultations with its members on the release of some of their oil products inventories after Hurricane Katrina ravaged the Gulf Coast and shut down around 90 percent of crude production capacity. The region is responsible for around 30 percent of U.S. crude production and quarter of its gas.
"We are discussing a broad range of countermeasures that Japan and other IEA members could take," the METI official said in a briefing. "Releasing our oil reserves is one possibility."
A separate METI official, also speaking on condition of anonymity, said that it was still not determined whether Japan would release the oil directly to the United States, or put it onto the open market as a way of depressing prices.
In Asia, Japan and South Korea are members of the International Energy Agency, a Paris-based oil market watchdog under the Organization for Economic Cooperation and Development, which recommends that its members hold oil reserves equal to at least 90 days of net imports or domestic requirements.
As of June 30, the Japanese government held 50.99 million kiloliters, or 320.7 million barrels, of state-owned crude oil stocks.
The reserves are one of the largest in the world - fitting since Japan, home to the world's second-largest economy, is one of the globe's largest consumers of oil and is nearly completely reliant on imports for its supply.
Under the oil stockpiling law, Japanese refiners, wholesalers and importers are required to maintain crude and refined product reserves equivalent to their oil imports or production volumes for 70 days.
Private oil companies held 20.6 million kiloliters, or 129.5 million barrels, of refined petroleum products, and 22.41 million kiloliters, or 140.9 million barrels, of crude oil, in stocks as of June 30.
Hurricane Katrina's destruction to oil facilities has sent oil prices surging. The front-month October light, sweet crude contract on the New York Mercantile Exchange fell 17 cents to US$69.30 a barrel midmorning in Singapore Friday.
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Shigeru Sato is a correspondent for Dow Jones Newswires
Source: Associated Press/AP Online
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