*Note: This is a provisional translation for reference purposes only.
Friday, October 21, 2022
Press Conference Room, METI Main Building
G7 Climate, Energy, and Environment Ministers' Meeting
First, we have made a decision on next year's G7 Climate, Energy, and Environment Ministers' Meeting. It will be held on Saturday, April 15 and Sunday, April 16 in Sapporo, Hokkaido. It has been decided that the official name of the meeting will be the G7 Ministers' Meeting on Climate, Energy and Environment in Sapporo.
As efforts to achieve carbon neutrality throughout the world are accelerating, it is necessary to also respond to the energy security crisis. We will lead discussions at the G7 to advance global GX, or green transformation, with the aim of growing the economy and addressing the current issues of energy security and decarbonization.
We will spare no effort in cooperating with the Ministry of the Environment, the city of Sapporo, Hokkaido Prefectural Government, and other relevant ministries and agencies to make the meeting successful.
In addition, I will visit Kawasaki City this afternoon to observe hydrogen-related facilities.
Q: I have two questions.
The first one is about the US company ExxonMobil's complete withdrawal from Sakhalin-1. There are concerns about the impact this will have on future operations. What are your views on this? Also, the government has one month to apply to take part in the new company. Please tell us about the current state of the discussions on whether to maintain Japan’s interests.
Second, the yen depreciated to over 150 yen per dollar yesterday. Please tell us your view on the potential impact it will have on Japan's economy and on economic measures, specifically the direction of Japan's response.
A: Regarding Sakhalin-1, there have been various media reports, and we have been communicating with relevant parties. I am also aware of the news about ExxonMobil’s withdrawal. Since Japan currently relies on the Middle East for about 90% to 95% of its crude oil imports, I believe that the importance of Sakhalin-1 from an overall energy security perspective remains unchanged.
I will refrain from commenting on this issue at this point in time, but since we will have to make a decision within a month, we will continue to consult closely with SODECO's private shareholders and other relevant parties, and consider specific responses.
Also, regarding your question on the comprehensive economic stimulus package and measures against the depreciation of the yen, I will refrain from commenting on the daily exchange rates and levels. Generally speaking—or in terms of economics—there are various factors involved, which include gaps in interest rates, trade balances, current account balances, and speculative actions. Since the depreciation of the yen is determined by various factors, there are both economic upsides and downsides.
The current change has been drastic, and there are more downsides than upsides. But the upside is that it is a good environment for businesses that export or are thinking about exporting. This is a good opportunity for exporters, particularly SMEs and companies in primary industries that have not been covered by comprehensive economic stimulus packages, and we will support them in various ways and improve the environment for them to increase exports.
This is also an opportunity to get people investing in Japan. The fact that the yen is very cheap presents an opportunity to invest in Japan, mainly in areas where growth is expected. The other day, I inspected JASM’s construction site in Kumamoto where an investment of 1 trillion yen is to be made with major involvement by TSMC. Now is a good opportunity for investments like that. We will provide bold capital investment support. I have heard that JASM’s investment has made SMEs throughout Kyushu much more willing to invest. Using the depreciation of the yen as an opportunity to promote exports and investments into Japan will lead to further investments being made. The Bank of Japan's most recent Tankan Survey (quarterly Short-term Economic Survey of Principal Enterprises in Japan) recorded a willingness to invest at over 16%, the highest level in recent years even compared to those prior to the COVID-19 pandemic. We will promptly start discussing what policies will further increase willingness to invest in Japan.
If investments in Japan and exports increase, it will improve the balance of current account as a result, and cushion the negative impact of the depreciation of the yen. The trade deficit in September was about 2 trillion yen, but now is a good opportunity to use the depreciation of the yen to improve the trade balance. We will establish bold support measures, as these efforts that make use of the depreciation of the yen will lead to measures to counter it.
Q: I have one question.
It seems that the United States is planning to release additional oil from its Strategic Petroleum Reserve (SPR). Japan has been working with the US since last autumn to curb the rising crude oil prices, and I think this release is in response to the drastic reduction in production by OPEC+ and the rise in crude oil prices.
I would like to ask if the US has approached Japan about cooperating on this. Also, I checked the price of crude oil just before the press conference, and it was in the $80 range. This is low compared to the levels between $120 and $130 in spring. In Japan, however, it is rising because of the depreciation of the yen. Please tell us your thoughts on the necessity to cooperate with the US in releasing oil stockpiles.
A: I understand that the U.S. has announced that it will release 15 million barrels of oil from the SPR in December, and I understand that it is part of 180 million barrels it decided to release earlier in spring. We are working with various countries including the US, and I will refrain from commenting on individual discussions with other countries. Japan has been releasing oil from its stockpiles as a collective action in coordination with the IEA. Regarding whether we will release additional oil, we will continue to monitor the IEA's policy and respond appropriately.
I will refrain from commenting on trends in crude oil prices, but stability is important. I have been taking various opportunities to frequently hold discussions with oil ministers of oil producing countries, both in person and over the phone. We want stability in the crude oil market and are having various discussions on topics including future prospects of the market and trends in oil producing countries. We hope that the market will stabilize.