http://www.yomiuri.co.jp/dy/business/T120113005987.htm
Japan must now tackle the difficult task of finding an alternative crude oil supplier following a decision to gradually reduce crude oil imports from Iran, which supplies 10 percent of the nation's crude oil.
The government officially informed U.S. Treasury Secretary Timothy Geithner of the decision Thursday.
The United States had pressured Japan to reduce Iran-produced crude over allegations that the Middle Eastern nation is engaged in programs to develop nuclear weapons.
At a joint press conference with Geithner on Thursday, Finance Minister Jun Azumi said, "We can't overlook the problem of Iran's nuclear development. We want to take actions to decrease oil imports [from Iran] at an early date in an organized manner."
On Dec. 31, Washington passed and enacted the National Defense Authorization Act, which includes a clause imposing sanctions on Iran's central bank.
The act prohibits banks in third-party countries from conducting financial deals with U.S. banks if they are found to have crude oil trade-related transactions with the Iranian central bank, effectively banning Iran from exporting crude oil to other countries.
However, the act also has an exemption clause stating that sanctions will not be imposed on financial institutions in countries that have drastically reduced crude oil imports from Iran.
The U.S. government will decide which countries will be exempted within 180 days from the NDAA's enactment date.
However, opinions within the Japanese government regarding the latest U.S. sanction are divided.
In the past, Japan gradually reduced the percentage of crude oil imports in accordance with the U.S. government's hard-line stance against Iran.
Japan also withdrew from a project to develop an Azadegan oil field in southwestern Iran in autumn 2010, even though the project was seen as a symbol of "Hinomaru oil wells"--Japanese-developed oil fields overseas.
Should Japan further reduce crude oil imports from Iran, one of the world's largest oil producers, it may become difficult to reestablish ties in the future.
If Japan increases imports from another oil-producing country, it also runs the risk that country may try to take advantage of the situation and demand higher prices.
However, the Japanese government had no choice other than to take concerted steps with Washington.
The European Union's 27 member nations basically agreed to ban crude oil imports from Iran. South Korea is also expected to follow suit.
"As Europe and many other countries have shown they will cooperate with the United States, we don't want to isolate Japan [in the international community]," a senior Japanese government official said.
But Japan will surely have to increase crude oil imports given that many of its nuclear power reactors are now idle.
One estimate shows that the crude oil used for thermal power plants in fiscal 2012 will be triple the amount in fiscal 2010.
A government source said the U.S. government had sent a behind-the-scenes signal that Washington "would not demand a total ban on imports" from Iran. Ahead of the finance ministers' meeting Thursday, the two sides agreed to make a compromise to reduce crude oil imports in an "organized manner."
===
Alternatives hard to find
Observers warned that a shutout of Iranian crude oil may result in global economic confusion.
In 2010, Japan imported 20.61 million kiloliters of Iranian crude oil, which is equivalent to about a 47-day reserve from the government's oil stores.
Simple calculations indicate that annually about 80 average-size tankers carry crude oil from Iran to Japan.
The petroleum industry has already lowered its reliance on Iranian crude oil. A senior official at the Economy, Trade and Industry Ministry said the percentage of Iranian crude oil imported in 2011 is estimated to have fallen to 8 percent.
But it is extremely difficult to secure an alternative crude oil supplier.
If many countries reduce imports from Iran, they will also try to import crude oil from other oil-producing countries, raising the possibility of a worldwide surge in crude oil prices.
The price of West Texas Intermediate, an indicator of global crude oil prices, was about 70 dollars per barrel in autumn last year, but has recently risen to about 100 dollars.
Iran has warned that if U.S. sanctions officially go into effect, it will blockade the Strait of Hormuz, which is used by about 80 percent of Japan-bound tankers carrying crude oil from the Middle East.
In the event this worst scenario becomes reality, the world may be hit by another oil shock reminiscent of those in the 1970s. Hidetoshi Shiota, senior analyst at SMBC Nikko Securities Inc., said, "Crude oil prices may jump exponentially."
This could cause serious turmoil in global crude oil markets, making it extremely difficult for Japan to secure crude oil.
Foreign Minister Koichiro Gemba visited Saudi Arabia, the United Arab Emirates and other oil-producing countries in the Middle East from Jan. 5 to 12.
Mitsuyoshi Yanagisawa, economy, trade and industry vice minister, is also scheduled to visit Saudi Arabia and the UAE from Saturday to ask for a stable supply of crude oil.
JX Nippon Oil & Energy Corp. plans to work around Iranian crude oil cuts by increasing imports from Saudi Arabia and countries in western Africa.
An oil industry official said, "There will be no serious problems for the time being in securing crude oil."
However, Japan will have to closely watch the United States' actions and Iran's response from now on.
and.....
http://www.japantoday.com/category/politics/view/japan-backtracks-on-iran-oil-cut-no-decision-yet-says-gemba
Prime Minister Yoshihiko Noda said Friday the government has yet to decide on whether it will reduce oil imports from Iran in line with U.S. sanctions, saying businesses implications need to be considered.
Noda’s comments retreated from the strong support voiced a day earlier by his finance minister, Jun Azumi, who said Japan would start reducing oil imports as soon as possible.
Noda described Azumi’s remarks as a “personal view,” and said his government needs to first consult with businesses about the sanctions.
Noda didn’t rule out Japan’s participation in the sanctions effort, and said he shared strong concerns about Iran’s nuclear program.
“Japan’s basic stance is to resolve such matters diplomatically and peacefully,” he said during a news conference. “We need to consult with the business community, and we need to work out details with U.S. officials. We have to think about the implications for Japanese banks, and what measures are needed to resolve possible negative impact.”
Washington is seeking to win global support for sanctions aimed at halting what Western governments say is Iran’s effort to develop nuclear weapons. The sanctions, targeting Iran’s main export of oil, would bar financial institutions from the U.S. market if they do business with Iran’s central bank.
Azumi’s supportive comments Thursday came after a meeting with U.S. Treasury Secretary Timothy Geithner, who had traveled to China and Japan this week partly to muster support for the sanctions. He got a chilly response from Beijing.
Tehran denies the West’s allegation that the program is aimed at building nuclear weapons.
Earlier Friday, Foreign Minister Koichiro Gemba also took a cautious stance toward the sanctions, warning that the move could drive up global oil prices that would only benefit Tehran and hurt the global economy.
Japan is heavily dependent on imported oil and natural gas to meet its energy needs, and obtains about 9% of its oil from Iran. Japan’s energy demands have increased even more since it shut down many nuclear plants in the wake of last year’s tsunami and the nuclear crisis in Fukushima.
“We need to respond carefully and wisely,” and Japan will finalize its policy in consultation with the U.S., Saudi Arabia and other countries, Gemba said during a joint news conference with visiting French Foreign Minister Alain Juppe.
“What’s going to happen if oil prices surge is that sanctions will not be effective,” Gemba said. “The higher oil prices, the more affluent Iran becomes,” he said, apparently referring to the likelihood of some countries ignoring the sanctions and continuing to buy from Iran.
Rising oil prices could “have an adverse effect not only on the Japanese economy but also the entire global economy,” he said, adding that his recent trip to the Mideast was made in anticipation of possible sanctions on Iran.
Gemba said Iranian oil accounts for about 9% of Japan’s oil imports, having decreased from 500,000 barrels per day to 300,000 barrels per day over the past five years.
Juppe, however, brushed off Gemba’s concerns about oil prices, saying that similar sanctions against Libya in the past did not drive up oil prices.
“Minister Gemba sounds extremely wary of higher oil prices, but I don’t think that would necessarily be the case,” Juppe said. “Once we had a similar situation with Libya but that didn’t lead to higher oil prices. We also believe we can obtain oil from other oil producing countries.”
He also said the impact from the suspension of transactions with Iran’s central bank would be “minimal.”
“I think we should prioritize what we consider a more pressing issue - the economy or nuclear weapons development,” Juppe said. “We have to decide which is more important.”
No comments:
Post a Comment