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Japan oil refiners to tap reserves in case of Middle East disturbance

Japanese oil refiners see no immediate impact from escalating stress in the Middle East on their unrefined procurement, but will utilize the nation's reserves in case of contingencies to make sure steady oil products, the industry group's head said.

We do not think that there are any barriers to the procurement of petroleum to Japan for now, Shunichi Kito, the president of Petroleum Association of Japan (PAJ), told a news conference on Wednesday, when asked about the impact of the Iranian counter-attack on Israel over the weekend.

Kito acknowledged that if the dispute were to intensify and affect the wider Middle East it would pose a serious problem.

In case of any disturbance in crude oil supply, it is essential to be prepared by making versatile usage of the oil reserve to make sure that the oil supply will not be disrupted, he stated, keeping in mind Japan's public and economic sectors have an integrated 240-day oil reserve.

Oil costs have softened up until now today as the Iranian attack on Israel showed less disruptive than anticipated.

Japan relies greatly on Middle Eastern crude, importing over 95% of its oil from the area.

Kito, who is also the president of Japan's No. 2 oil refiner Idemitsu Kosan, said his company is looking into possibility of substituting some supply from the Middle East with other sources.

As alternative sources, we are thinking about crude from West Africa and The United States And Canada, if they can be transported and processed smoothly in our refineries, he said.

But he noted that most Japanese refineries are designed to procedure crude from the Middle East, and it would not be easy to switch to brand-new products as they might not fit with their facilities.

(source: Reuters)