*Note: This is a provisional translation for reference purposes only.
Friday, November 26, 2021
Press Conference Room, METI
Q: With regard to this coordinated release of oil stockpiles, the government is saying it is just advancing the scheduled replacement of oil, but announced the release together with the United States and other countries. The oil prices went up after the announcement, but appear to be coming down again today. Do you think emphasizing the coordinated release had any effect on the market?
A: As announced on the 24th, we have decided to join the United States and other allies and sell several hundred thousand kiloliters of oil from the national oil stockpiles, in a way that will not contravene the Oil Stockpiling Act. This will be done as part of our existing plans for replacing oil grades.
I would like to refrain from commenting on matters like prices in the international crude oil market. We will continue to closely monitor the impact of the trends in the international energy market and of fluctuations in energy prices on the Japanese economy.
Additionally, the government will keep urging oil producing countries to increase production. It will also steadily implement existing industry-specific measures for agriculture, fisheries and other businesses, and mitigation measures to suppress rapid rises in gasoline and kerosene prices.
Q: I do not know if you have checked the morning papers, but the Mainichi Shimbun reported that several European banks in succession have withdrawn from the consortium for funding an Arctic LNG project undertaken by a Russian major gas producer. I am personally not opposed to LNG projects or providing public support for risky projects, but as environmental awareness increases, the risks are also increasing in some senses. In addition, the lending and investment amounts already announced show that the majority of the project's funding is coming from government-affiliated institutions, and that seems like putting the cart before the horse. What are your views on the report and the project itself?
A: I read the Mainichi, so I am aware of the report you are talking about.
I would like to refrain from commenting on the dealings regarding specific projects. However, this project will contribute to diversifying Japan's sources of LNG and help establish a new procurement route for our country—namely an Arctic Ocean route—enabling a stable and long-term supply. Therefore, the project is extremely important for Japan.
Incidentally, I chaired an Arctic summit in July—when I was the Minister of Education, Culture, Sports, Science and Technology—and was responsible for reaching an agreement with other member states about how important this Arctic sea route is. In that sense, this is an extension of the work I have been doing up to now. Besides that, natural gas is also used as a raw material to produce hydrogen, and we perceive that combined with CCUS technology and other decarbonization technologies, it will be an essential energy source in a carbon-neutral society.
To answer your question, any criticism that our policy is outdated would be understandable if we were simply trying to carry on using the resource as it is. However, Japan has announced to the international community that it will use technology to properly address any issues, for example by turning it into hydrogen and recycling emissions through CCUS, as we have repeatedly said. So, we are committed to making full use of it as a valuable resource.
The Japanese government believes that this project is extremely important to our energy security, and we intend to continue to support it.
Soaring Crude Oil Prices
Q: I would like to ask you about the soaring crude oil prices.
Prices remain high despite the decision to release oil stockpiles. At the same time, some oil producing countries, like Saudi Arabia and the UAE, are cooperating with Japan by increasing the amount of crude oil they export to it. Does Japan plan to release more stockpiles or ask oil producing countries for further cooperation? What price per barrel is the Japanese government aiming for?
A: First of all, this measure is simply bringing forward the planned sales of oil stockpiles to replace oil grades as we have been doing for years. So, it is not a release of our stockpiles under the Stockpiling Act. Continuously releasing the stockpiles is not legally permitted. As we keep saying, this measure is just a case of cooperating with a suggestion from the US and other allies to release some of our national stockpiles by selling some oil grades for replacement. The law forbids Japan to release its oil stockpiles, but we do sell off a certain amount every year to replace some oil grades, and in fact, we were thinking about deciding after the New Year holidays exactly when to do it. We simply brought forward the timing of sales to cooperate with the US and other allies.
Therefore, we are not trying to solve something through this, and will continue urging oil producing countries to increase production. I also believe that having a trusting relationship with the oil producing countries is extremely important, so we will continue to properly show them what our basic stance is.
In any case, I would rather refrain from saying anything about specific quantities and prices that could affect the international crude oil market. However, in order to stabilize it, we will continue to use various channels to approach major oil producers in OPEC+ like Saudi Arabia and the UAE as you mentioned. So, our stance will remain the same in that regard.