Japan will release 7.3 million barrels of reserve oil kept by 66 private-sector refiners over a 30-day period beginning Wednesday in a concerted action by the International Energy Agency to help stabilize the world oil market in the wake of Hurricane Katrina.
More than 200,000 barrels a day of crude oil or petroleum products will be released on the domestic market, Economy, Trade and Industry Minister Shoichi Nakagawa said Tuesday.
It is up to the refiners to decide which products or how much crude to discharge, government officials said.
Private-sector oil firms are required to reserve enough oil to meet demand for 70 days, but the Ministry of Economy, Trade and Industry will lower that level to 67 days to augment supplies on the market, the minister said.
The IEA announced Friday that its 26 members will release a total of 2 million barrels from their strategic oil reserves per day for an initial period of 30 days in light of the considerable hurricane damage to oil production facilities along the U.S. Gulf Coast.
“The concerted action by the IEA, which includes major oil consumers in the world, is very meaningful and can send messages to oil producers and developing countries that are in trouble” because of surging oil prices, Nakagawa said at a press conference.
“Japan made the decision because it should actively and speedily deal with the matter,” he said, adding that further efforts would be made to promote energy conservation.
At a separate news conference, Chief Cabinet Secretary Hiroyuki Hosoda praised the IEA’s action and said Japan will closely monitor the reserve oil’s impact on the global market.
Nippon Oil Corp. Chairman Fumiaki Watari, head of the Petroleum Association of Japan, said in a statement that the association will “positively respond to the request for cooperation” on the reserve oil release.
The last time the IEA tapped its members’ reserves was in 1991, when it tried to curb soaring oil prices during the Gulf War.
Japan is required to discharge 12.2 percent of the IEA’s 60-million-barrel goal over the 30 days, but that amount may change after the Paris-based organization reviews the impact of its coordinated release around Sept. 15, METI officials said.
As of June 30, Japan had reserves equivalent to 171 days’ worth of its consumption, comprising the private-sector’s stockpile of 79 days and the state’s oil stockpile of 91 days, according to METI.
Although the IEA said in a statement that the release of gasoline will be “the most useful contribution,” Japanese oil firms have noted a decline in gasoline inventories due to the summer driving season.
Therefore, the government instead will urge them to reduce imports, the officials said.
The United States has lost 1.5 million barrels per day of oil production and 2 million barrels a day of refining capacity, the IEA said.
Crude oil futures hit a record high above $70 per barrel last Tuesday after the hurricane, but prices have come down somewhat since the IEA’s announcement. Global crude oil demand is estimated at 84 million barrels per day, according to the IEA.
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