Japan starts process to sell 5 mil barrels oil from national reserves: minister

Japan on April 22 started the process of selling around 5 million barrels of oil from the national petroleum reserves, said Minister of Economy, Trade and Industry Koichi Hagiuda, marking the country's first oil sales from the national reserves.

"We started today a public notice of selling the national petroleum reserves for the first time since the start of the system, as part of our response to a joint oil release agreed at the IEA's extraordinary ministerial meeting," Hagiuda told a press conference

Japan is offering to sell around 5 million barrels of oil from the three national oil storage terminals, Hagiuda said, adding that the country will proceed with selling the remaining barrels at a quick pace.

The first batch of oil sales would mean another 4 million barrels to be sold as Japan plans to tap a total of 9 million barrels of oil from the national petroleum reserves as part of its contribution to the International Energy Agency's joint effort.

The latest IEA move comes after the US pledged in the week ended April 2 to tap 180 million barrels of oil, effectively releasing 1 million b/d for six months from May, in a bid to alleviate market concerns over potential shortages from a drop in Russian oil exports.

The IEA also clarified April 7 that over the next six months, around 240 million barrels of emergency oil stocks -- the equivalent of well over 1 million b/d -- will be made available to the global market. That implies the total release would include the 62.7 million barrels announced by the IEA on March 9, 30 million barrels of which is coming from the US.

Japan's oil sales from its national oil reserves will be the first under the country's petroleum stockpiling law since the reserves were established in 1978.

Japan to sell Hout crude via tenders

Japan plans to sell a total of 760,000 kiloliters or 4.78 million barrels of Hout crude oil produced in the Saudi Arabia-Kuwait Neutral Zone from the national petroleum reserves held in the Shirashima, Kamigoto and Kiire oil reserve terminals in the southwest via three public tenders on May 10.

In public tenders May 10, Japan will offer around 280,000 kiloliters or 1.76 million barrels of Hout crude in up to three shipments from the Shirashima national oil reserves terminal in Kita Kyushu City for delivery over June 20-Sept. 30, according to METI's public notices.

Among the May 10 tenders, Japan will also offer around 160,000 kiloliters or 1.01 million barrels of Hout crude in up to two shipments for deliveryover June 20-Sept. 30 from the Kiire oil storage terminal in Kagoshima prefecture, according to the METI public notices.

In another May 10 tender, Japan will offer around 320,000 kiloliters or 2.01 million barrels of Hout crude in up to three shipments over Aug. 11-Sept. 17 from the Kamigoto oil storage terminal in Nagasaki prefecture, according to the public notices.

Private reserves

The move to sell the national oil reserves follows Japan's April 16 start of releasing 6 million barrels of oil from privately held oil reserves, by allowing local refiners and oil product importers to lower their stockpiles by three days over April 16-Oct. 8.

The Japanese government in an April 7 announcement said it plans to release a total of 15 million barrels, including from the national oil reserves, for the IEA's largest ever stock release of 120 million barrels.

Together with its earlier release of 7.5 million barrels of crude and oil products from privately held petroleum reserves, or four days of the stockpile requirements, Japan will lower the requirementsfor the privately held reservesby a total of 13.5 million barrels or seven days.

Japan extended April 8 the period of its previous release of 7.5 million barrels of crude and oil products from privately held petroleum reserves by six months to Oct. 8, in response to a recent request from the IEA amid the prolonged Russia-Ukraine war, according to a METI source.

At the end of February, Japan held a total of around 469.09 million barrels of petroleum reserves, equating to 234 days of domestic consumption, comprising national petroleum reserves, oil reserves held by the private sector and a joint crude oil storage program with oil-producing countries, according to METI data released April 15.

Crude stocks in the national oil reserves accounted for 286.06 million barrels of the total, while oil products in the national reserves comprised another 8.99 million barrels.

Privately held crude reserves totaled 78.31 million barrels, with oil products stocks at 89.57 million barrels, while 6.29 million barrels of crude were held by oil producers in Japan.