*Note: This is a provisional translation for reference purposes only.
Tuesday, March 1, 2022
Press Conference Room, METI
The Bill to Amend the Act on the Rationalization of Energy Use
I would like to start with four points.
First, the Cabinet decided today on a Bill for the Act of Partial Revision of the Act on the Rationalization etc. of Energy Use and Other Acts in Order to Establish Stable Energy Supply and Demand Structure.
This bill changes the definition of energy in the Act on Rational Use of Energy and promotes transitioning to non-fossil energy and using electricity that utilizes excess renewable energy, in order to shift the demand structure towards realizing the Sixth Strategic Energy Plan approved by the Cabinet in October 2021. It also promotes the use of decarbonized fuels (such as hydrogen and ammonia) and decarbonization technologies and strengthens support for them through JOGMEC, in order to change the supply structure. Additionally, to ensure a stable energy supply, it changes the notification system about power supply suspension or abolition so that notifications should be submitted before the fact rather than after, and includes large storage batteries in power generation businesses. We will make every effort to enact this bill quickly. The administrative staff will explain in detail later.
The Situation in Ukraine
Second, the recent invasion of Ukraine by Russia is an attempt to unilaterally change the status quo by force and undermines the very foundation of international order, and I strongly condemn it. Japan will cooperate with the other members of the G7 and the international community to impose stringent sanctions on Russia.
From that perspective, the Cabinet has agreed to the ban on exports of items on the list that was internationally agreed upon on February 26, and it has additionally agreed to bans on exports to Russian-military-related organizations as well as exports of general-purpose goods that would contribute to strengthening the Russian military capabilities.
Moving forward, we intend to cooperate with relevant ministries and agencies to implement these bans and revise the system as needed.
Third, Toyota Motor Corporation announced yesterday that it would halt operations at all its 14 factories within Japan due to its supplier, Kojima Industries Corporation, experiencing a system failure that resulted from a cyberattack.
I have heard that they are doing everything in their power to resume production, and METI will continue working to uncover the facts in this situation.
The current situation shows that the risk of cyberattacks is increasing, and there is growing concern that DDoS, ransomware, and other attacks will damage companies. The damage from these cyberattacks can go beyond companies that are directly attacked to broadly impact supply chains, including their suppliers.
Last week, on the 23rd, METI issued a call for attention on strengthening cybersecurity measures considering the current situation. However, I am asking the industrial world to make further efforts to strengthen their cybersecurity measures.
If a company detects anything suspicious, they should promptly consult with either METI or a security-related organization to take swift action.
IEA Ministerial Meeting
Fourth and finally, I plan to attend a minister-level meeting at the IEA this evening. I hope to work closely with countries related to the IEA on oil reserves and other issues. I will share information on the meeting later.
That is all.
The Situation in Ukraine
Q: I have two questions.
First, measures are being taken to exclude selected Russian banks from SWIFT. How do you see this impacting Japan's economy and domestic energy supply? Also, how do you plan to deal with those issues?
A: First, Japan is participating in the SWIFT sanctions because it was requested by Europe and the US to do so, but financial institutions that are subject to the sanctions have yet to be determined. Also, I understand that the US is considering ways to exclude energy-related transactions from these sanctions.
METI will rigorously coordinate information with all G7 countries on the details of these measures, and we will firmly and closely examine the effects they would have on Japan's economy and a stable energy supply.
Regarding the stable energy supply in particular, based on the fact that about 10% of Japan's LNG and coal is imported from Russia, I want to make firm arrangements with both Europe and the US to ensure that there are no negative impacts on the energy supply into Japan and urge related countries to take action when necessary.
Current national and private oil stockpiles together are equivalent to about 240 days of Japan’s requirements, and power and gas companies hold stocks of LNG satisfying two to three weeks’ requirements. We will consider every possibility and implement all available measures in the public and private sectors, including sharing stocks between businesses, toward ensuring the stability of energy supply.
Soaring Oil Product Prices
Q: I have one more question.
Crude oil prices continue to soar given the situation in Ukraine. What additional measures for gasoline and other products is the government considering, which are to be announced as soon as this week?
A: The situation in Ukraine continues to be tense, which is further driving the soaring crude oil prices that had already been rising. As Prime Minister Kishida said at a conference on the 25th, we plan to drastically expand and strengthen the operation to respond to sudden fluctuations in oil product prices in order to protect citizens' lives and the Japanese economy from energy market surges. We will promptly establish additional measures from the viewpoint of minimizing impacts on citizens' lives and economic activity. This week, in addition to the mitigation measures against sudden price fluctuations, we will work under the Chief Cabinet Secretary to compile multi-layered measures that include industry-specific countermeasures and move to implement them promptly.
The Situation in Ukraine
Q: We would like to ask you about future business in Russia. Major oil company Shell announced that it intends to withdraw from Sakhalin 2, in which Japanese trading companies take part. Will this project be able to continue? Could energy procurement be disrupted in the future?
In addition to that project, Sakhalin 1 is also under METI's jurisdiction, and METI has supported Russian companies even outside of the energy sector, including through NEXI. Couldn't this be taken as indirectly supporting Russia in invading Ukraine? Please also tell us about your thoughts on this, and how you intend to respond going forward.
A: First, I would like to emphasize that the recent invasion of Ukraine by Russia is an attempt to unilaterally change the status quo by force and a blatant violation of international law that undermines the very foundation of the international market, and it absolutely cannot be overlooked.
We will work in cooperation with the G7 and the rest of the international community to strengthen sanctions against Russia, including from an energy security perspective. We will take appropriate measures on energy-related projects in Russia that involve JOGMEC and NEXI, based on discussions with the G7 and others.
Q: I have a question about diverting additional LNG to Europe. Some reports indicate that Japan is discussing with the EU arrangements from April onward. Please tell us the facts and the government's response.
A: The EU has not approached the Japanese government about diverting additional LNG from April onward. The last time I spoke with the ambassador was on February 9. Russia invading Ukraine, the international response, and countries considering further sanctions, all make for a rapidly changing situation. Taking into consideration the current situation as well as every possibility, I want to reiterate that we should make every effort to ensure a stable supply in Japan first. Thus, I think we need to firmly focus on our own situation from April onward.