Oil and Gas Emergency Policy - Japan 2013 update
Oil remains the most significant energy source in Japan, accounting for some 45% of the country’s total primary energy supply (TPES) in 2011. Japan’s oil demand steadily decreased from 5.71 mb/d in 1997 to 4.47 mb/d in 2010. However, its oil demand increased to 4.48 mb/d in 2011 and 4.73 mb/d in 2012 due to the Great East Japan Earthquake in March 2011 and its subsequent impacts. The transport sector represented around 38% of total consumption in 2010, while the industry sector accounted for 30%. A significant proportion of the industry sector’s oil demand comes from the chemical industry.
Of the 4.8 mb/d of oil imported by Japan in 2012, 3.5 mb/d consisted of crude oil, 209 kb/d of NGLs and feedstocks, and some 1.2 mb/d of refined products. About 83% of Japan’s crude oil imports in 2012 came from the Middle East. The country has 27 operational refineries with a total crude distillation capacity of around 4.5 mb/d.
Japan meets its 90-day stockholding obligation to the IEA by holding government emergency stocks and by placing a minimum stockholding obligation on industry. JOGMEC’s primary role is to manage public stocks under the Oil Stockpiling Act, while industry (refineries, specified distributors and importers) is obliged to hold the equivalent of 70 days of their daily imports, sales or refinery production, based on the average of the previous 12 months. The public stocks mostly consist of crude oil, but the Administration has expanded its emergency inventory to include four categories of refined products - gasoline, kerosene, fuel oil and diesel oil.
Japan held some 591 million barrels (mb) of oil stocks at the end of January 2013, equating to 166 days of 2011 net-imports (92 days of government stocks and 74 days of industry stocks). Around 72% of total stocks were held in the form of crude oil. Japan has consistently met its minimum IEA stockholding obligation.
The share of natural gas in the country’s TPES increased significantly from 17% in 2010 (before the March 2011 earthquake) to 22% in 2011, due to growing demand from the electricity generation sector. Japan’s demand for natural gas steadily increased from some 26 billion cubic meters (71 mcm/d) in 1980 to around 109 bcm (298.6 mcm/d) in 2010, to 124 bcm (340 mcm/d) in 2012. Japan’s domestic natural gas production is limited – with production of around 3.3 bcm in 2012.
Natural gas supply sources to the country are well diversified. In 2011, Malaysia was the largest supplier, representing 18% of total imports. As Japan has no cross border pipelines, the country imported natural gas through 31 LNG terminals with around 10 bcm of natural gas storage capacity.
Key elements of Japan’s overall gas security policy are diversifying its long-term supply contract portfolio, ensuring flexibility of increasing imports in times of an emergency in long term contracts, and using voluntary commercial LNG stocks in industry. Even though industry is not obliged to hold any emergency gas stocks, industry has commercial stocks equivalent to about 20 to 30 days of consumption.
There is no single transmission operator in the country as the trunk line networks have developed separately around LNG terminals and they are not necessarily connected to each other. Each gas company is asked to ensure its natural gas supply to its distribution area.