Japan reveals plan to enhance energy supply structure amid Mideast conflict

Tokyo (Kyodo) -- The Japanese government unveiled an extensive plan on Wednesday to bolster its energy supply system, emphasizing the diversification of oil sourcing and backing pipeline development in oil-producing countries in response to the Middle East conflict. The policy suite, also aimed at advancing Japan's decarbonization efforts and boosting self-reliance via renewable and nuclear power, was unveiled during a green transformation government meeting at Prime Minister Sanae Takaichi's residence in Tokyo.

Takaichi declared the government would confront evolving global energy dynamics head-on and safeguard the well-being of citizens and their economic pursuits. The discussion was partially open to journalists. The move followed Takaichi's pledge in June to devise a more robust energy system plan by the end of August, entrusting industry minister Ryosei Akazawa – who also presides over green transformation – to advance preparations.

Due to its heavy reliance on Middle Eastern crude imports, Japan suffered significant setbacks following the closure of the Strait of Hormuz, a crucial oil shipping corridor, since the U.S.-Israeli war against Iran began in late February. To promote diversification of supplies, the government will establish a mechanism for oil wholesalers and trading firms to pool the additional expenses associated with importing crude from non-Middle Eastern regions.

A fee levied on the wholesalers and trading companies will finance subsidies for businesses importing oil that bypasses the Strait of Hormuz. Tokyo will also collaborate with Middle Eastern nations to construct pipelines through the government-sponsored Japan Organization for Metals and Energy Security. Other plan components include stockpiling naphtha, a widely used raw material in plastics, packaging materials, and printing ink solvents.

A recent naphtha shortage has hampered the operations of numerous Japanese enterprises. While the government predicts stable crude oil supplies for now, the plan acknowledges that navigating a supply chain heavily dependent on the Middle East and the escalating costs of alternate procurements are significant challenges.