Japan to ensure stable energy supply with reserves if Russia-Ukraine crisis worsens: minister

Japan will make every effort to ensure stable energy supply for the country with its petroleum reserves and LNG stocks should the Russia-Ukraine situation deteriorate further, Minister of Economy, Trade and Industry Koichi Hagiuda said Feb. 22.

"Securing stable and affordable energy as well as ensuring its stable supply is crucially important," Hagiuda told a press conference.

"We will be absolutely prepared with petroleum reserves worth about 240 days [of domestic consumption] and two to three weeks worth of LNG stocks held by power and gas utilities."

Tensions between Russia and Ukraine escalated Feb. 21 after Russian President Vladimir Putin recognized two breakaway regions of Ukraine and ordered Russian troops to conduct "peacekeeping operations" there.

The ministry is closely monitoring developments in Ukraine as Japan could be impacted should the situation where it cannot take Russian supply arise, a METI source told S&P Global Platts Feb. 21.

Russian LNG accounted for 9% of Japan's total imports of 74.32 million mt in 2021, while the country's crude oil imports from Russia accounted for 4% of total imports of 2.48 million b/d, according to the Ministry of Finance data.

At the end of December 2021, Japan held a total of around 484 million barrels of petroleum reserves, equating to 241 days of domestic consumption, comprising national petroleum reserves, oil reserves held by the private sector and a joint crude oil storage scheme with Saudi Arabia and Abu Dhabi, according to the latest METI data released Feb. 15.

LNG stocks held by Japan's major power utilities continued to rise in the week to Feb. 20, up 2.2% to 1.82 million mt, from 1.78 million mt the week before, METI said Feb. 22.

Japan, which is also monitoring the impact of rising oil prices on corporate activities and livelihoods closely, will consider various options and decide whether to implement new measures to mitigate the impact of soaring crude prices beyond April, Hagiuda said.

"The current mitigation measures [for soaring crude oil price] lasts until March so we need to determine the course [to take] beyond April, during March," Hagiuda said. "We will make sustained efforts for this consideration."

On Jan. 27, Japan started providing a first of its kind subsidies to refiners and oil product importers in a bid to curb increases in retail prices of refined products such as gasoline, kerosene and gasoil as the average retail gasoline price passed the Yen 170/liter threshold across the country on Jan. 24.