Japan’s JERA Creates Oil Storage Firm to Manage National Reserve Sites

Japanese energy company JERA is establishing a new firm, JERA Oil Storage, to manage the nation's petroleum stockpiling sites. The creation of the dedicated operating company comes as the Middle East crisis has disrupted the oil procurement market for Japan, a resource-poor member of the G7. JERA announced the formation of JERA Oil Storage on Friday, stating that the new company will handle the operation of four national petroleum stockpiling bases currently managed by the JERA Group and its affiliated subsidiaries.

These bases are located in Tomakomai-Tobu, Akita, Fukui, and Shibushi. The establishment of JERA Oil Storage aims to enhance safe and stable operations while ensuring the transfer and advancement of operational expertise. As tensions in the Middle East continue, Japan has been working to secure alternative sources of crude oil, as its dependence on Middle Eastern supplies accounted for more than 90% of all crude imports.

About 70% of these Middle Eastern supplies typically arrived in Japan via tankers passing through the Strait of Hormuz. In response to the crisis, the G-7 economy has released crude from its strategic reserves as part of an IEA-coordinated global effort to release 400 million barrels of crude and oil products. Japan has been purchasing crude oil from various faraway locations, including Canada, Azerbaijan, and Africa, to compensate for the significant loss of deliveries from the Strait of Hormuz.

However, sourcing crude oil from distant places to replace the major loss of deliveries from the Persian Gulf comes at a high economic cost, with soaring oil import bills impacting industrial and economic activity.