Japanese energy firm JERA is creating an oil storage company which will exclusively manage the operation of the national petroleum stockpiling bases that JERA currently operates, as the Middle East crisis has upended the oil procurement market in the resource-poor G7 economy of Japan.
JERA Co., Inc. said on Friday it had established JERA Oil Storage as a dedicated operating company to manage the operation of national petroleum stockpiling bases currently operated by JERA and its affiliated subsidiaries under a joint contracting arrangement with the Japan Organization for Metals and Energy Security (JOGMEC).
Currently, subsidiaries of the JERA Group operate four national petroleum stockpiling bases in Japan—at Tomakomai-Tobu, Akita, Fukui, and Shibushi.
“To further enhance safe and stable operations and ensure the transfer and advancement of operational expertise, we will establish an operating structure dedicated exclusively to the oil stockpiling business,” the company said today.
Since the war in the Middle East began, Japan has scrambled to secure crude oil supply from alternative sources as its dependence on crude from the Middle East passing through the Strait of Hormuz was more than 90% of all crude imports. Of the Middle Eastern supplies, about 70% typically arrived in Japan on tankers traveling through the Strait of Hormuz.
The G-7 economy has also moved to release crude from its strategic reserves as part of an IEA-coordinated global effort to release 400 million barrels of crude and oil products.
Japan is now buying cargoes from as far as Canada, Azerbaijan, and Africa to offset the supply that continues to be trapped in the Persian Gulf.
However, the economic cost of sourcing crude oil supply from faraway places to offset the major loss of deliveries from the Strait of Hormuz is high, with soaring oil import bills weighing on industrial and economic activity.
By Tsvetana Paraskova for Oilprice.com
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