Japan's legislation on oil security

Part of Oil Security Toolkit

The Japanese oil supply emergency regime is primarily governed by the 1980 Petroleum Supply and Demand Adjustment Act (122/1973) (PSDA), the 2002 Oil, Gas and Metals National Corporation Law (94/2002) (OCL) and the 1975 Oil Stockpiling Act (96/1975)(OST).


According to the article 7(3) of the OST, in the situation where a shortage in the oil supply to Japan occurs, or a shortage in the oil supply to a particular domestic region occurs due to a disaster in Japan, or there is a risk of such occurrence, the Minister of Economy, Trade and Industry may reduce such standard Oil stockpiles within a set period of time if deemed particularly necessary to ensure a stable oil supply.

According to the article 31 of the OST, in the situation where a shortage in the supply of oil to Japan occurs or may occur, or a shortage in the supply of oil to a particular domestic region occurs or may occur due to a disaster in Japan, the Minister of Economy, Trade and Industry may, if deemed particularly necessary to secure a stable supply of oil, transfer or loan Government-Stockpiled Oil as pursuant to the provision of the Ordinance of Ministry of Economy, Trade and Industry.

The provisions of the PSDA are triggered when there is an actual or potential shortage of oil due to the occurrence of natural disasters affecting Japan to such an extent that the smooth operation of the national economy is potentially or actually affected (article 4(1) PSDA). Article 10(2) PSDA further specifies that emergency stocks may be released when the national oil supply is disrupted to such an extent that the security of the public or other public interests are detrimentally affected.


According to the articles 7(3) and 31 of the OST, whether or not the circumstances triggering the provisions of the OST exist, is determined by the Minister of Economy, Trade and Industry.

Whether or not the circumstances triggering the provisions of the PSDA exist, is determined by the Japanese Prime Minister in consultation with the Japanese cabinet (article 4(1) PSDA).


General

With respect to commercial stocks, article 6(1) OST determines that petroleum distributers and importers should create and maintain such quantities of emergency stocks as the Minister of Economy, Trade and Industry determines.

Storage Agency

Japan does not have a central stockholding entity. However, the Japanese Oil, Gas and Metals National Corporation (JOGMEC) manages the emergency stocks and national stockpiling facilities of the Japanese Government (article 3 OCL, see also article 11(1)(x) OCL and article 29 OST). In principle, this also entails the acquisition, storage and allocation of petroleum (article 11(xi) OCL) as well as the provision of funding required to establish stockpiling facilities (article 11(1)(xii) OCL).

Storage Quantity

Japanese primary legislation does not provide for a specific quantity of oil that shall be stocked. Instead, oil stockpiling targets are fixed on a five-year basis by the Minister of Economy, Trade and Industry (article 4(1) OST). However, article 5(2) OST determines that, in any event, the quantity of Japanese private emergency stocks should equate to 70-90 days of Japanese oil consumption in the previous year.

Availability of stocks

Japanese primary legislation does not provide for parameters governing the availability of emergency stocks.

Storage Locations

Japanese primary legislation does not provide for parameters governing the location of emergency stocks.

Sale of excess stocks

N/A


General

According to article 3 OST, in the event of an oil supply disruption the Japanese government shall take measures to address the disruption by distributing emergency oil stocks.  

Stockdraw

Sale/Tender

According to article 7(3) OST, in the situation where a shortage in the oil supply to Japan occurs or a risk of occur, the Minister of Economy, Trade and Industry may reduce such standard stockpiles within a set period of time if deemed particularly necessary to ensure a stable oil supply.

According to the article 30(1) OST, the Minister of Economy, Trade and Industry may, if deemed necessary, exchange Government-Stockpiled Oil with oil owned by any individual or juridical person other than the government.

According to the article 31 OST, in the situation where a shortage in the supply of oil to Japan occurs or may occur, or a shortage in the supply of oil to a particular domestic region occurs or may occur due to a disaster in Japan, the Minister of Economy, Trade and Industry may, if deemed particularly necessary to secure a stable supply of oil, transfer or loan Government-Stockpiled Oil as pursuant to the provision of the Ordinance of Ministry of Economy, Trade and Industry.

Production Surge

N/A

Demand restraint

The above-mentioned power of the government to modify the rate of import/distribution in such a manner that any detrimental effects of oil supply shortcomings could be alleviated could also be used to restrict a commercial entity’s utilisation of oil (article 6(2) PSDA).

More specifically, article 9(1) PSDA authorises the Minister of Economy, Trade and Industry to order commercial entities to reduce the consumption or distribution of oil products. Possible measures include restrictions on selling methods or limited opening hours (article 9(1) PSDA). When implementing the provisions of the PSDA special attention should be paid to the interests of vulnerable groups of the population (article 9 PSDA).

Fuel Switching

N/A

Relaxations of Road Traffic and Transport Laws

N/A


Japan’s emergency regime is monitored and enforced on the domestic and international level. Each will be considered in turn.

Domestic

Reporting duties

According to the article 40(1) OST, the Minister of Economy, Trade and Industry may, as required in this Act and within the limit necessary for the enforcement of this Act, oblige Oil Traders to report matters relating to its business.

According to the article 40(2), the Minister of Economy, Trade and Industry may, within the limit necessary for the enforcement of this Act, cause its personnel to enter the office, plant, and other business establishment of Oil Trader to inspect its books, documents, and other materials.

According to the 39 OST, Oil Refiner, or Oil Gas Importer shall, pursuant to the provision of the Ordinance of Ministry of Economy, Trade and Industry, provide the books, enter the volume of crude oil, Designated Oil Products, or Oil Gas it holds and other matters designated in the Ordinance of Ministry of Economy, Trade and Industry therein and keep and maintain such books.

Additionally, article 15(1) PSDA (see also articles 5(1)OST) obliges oil refiners, importers or distributers to create and maintain logs of emergency oil stocks and to make such logs available to Japanese officials (article 16(1) PSDA).

Enforcement

According to the article 45 OST, any individual or juridical person violating any order under the provisions of OST (article 9(2) or article 12(2)) shall be punished by imprisonment with work for up to one year or a fine of up to three million (3,000,000) yen or cumulative imposition .

The PSDA stipulates that prison sentences of a maximum of three years or fines of no more than one million yen shall be imposed for violations of PSDA provisions (article 21 PSDA). 

International

The IEA

As a Member of the IEA, Japan is obliged, pursuant to article 2 of the International Energy Programme (IEP), to maintain oil reserves equal to 90 days of net imports of the previous year. IEA Members are obliged to submit information concerning their emergency measures to the IEA secretariat (article 32 IEP) on a continuous basis and the IEA monitors Member countries’ compliance with the IEP. The IEP does not, however, make any provision for the enforcement of any obligations imposed by the IEP.