Sudan abuses may spur oil ban; utilities probe impact

by Shigeru Sato and Yuji Okada


The trade ministry is studying the effect of a possible ban on Sudanese oil imports, anticipating increased public pressure to halt trade with the African nation because of concern about human rights abuses, officials said.

The world’s second-largest oil importer would become the first nation to take such a step. The trade ministry had hearings with refiners and utilities, including Nippon Oil Corp., Japan Energy Corp. and Tokyo Electric Power Co., to probe the consequences of a halt, ministry and company officials said.

Human rights groups have sought to end investment and trade with Sudan, accused by the United States of supporting genocide in the western Darfur region. Sudan’s Nile Blend crude is valued as a cheaper alternative to low-sulfur fuel oil and is among the two most popular crude grades burned by Japanese utilities. Imports gained almost 10-fold last year to cope with rising power use.

“The supply of alternative oil is limited,” said Jun Oshima, a spokesman for Tokyo Electric, the country’s largest power utility.

A 4 1/2-year civil war in Sudan’s Darfur region has claimed the lives of 200,000 people and forced 2.2 million more to flee their homes.

Japan started importing Nile Blend oil in 2000 to make up for falling shipments of Indonesia’s Minas crude. Production of Minas has been declining as the field ages.

“I’m very sorry to hear that Japan is cutting oil imports from Sudan, if that’s true,” said Hamza Bwau, deputy head at the Sudanese Embassy in Tokyo. “But I believe the situation in Sudan will be resolved peacefully in the next few years.”

Japan’s Nile Blend crude imports increased to 6.28 million kiloliters in 2006 from 636,345 kiloliters in 2000, according to data compiled by the trade ministry. Minas crude imports fell 78 percent to 3.18 million kiloliters last year from 14.6 million kiloliters in 1976, the data show.

The 10 regional power utilities in the world’s second-biggest economy burned 1.62 million kiloliters of Nile Blend in the year to March 31, or 27 percent of their total. The oil has 0.045 percent sulfur, according to the International Crude Oil Market Handbook published in 2006 by the Energy Intelligence Group. Some Tepco facilities limit sulfur in fuel oil to a maximum 0.1 percent.

The hearings in Tokyo with refiners and utilities were led by the trade ministry’s agency for natural resources and energy, the officials said.

Kansai Electric Power Co., the nation’s second-biggest generator, and Kyushu Electric Power Co. will cut crude oil imports from Sudan because of concern the revenue may be used to fund military action in Darfur, officials said Nov. 12.

Kepco has started reducing Nile Blend purchases, spokesman Ryuichi Suehiro said. Kyushu Electric has asked Nippon Oil Corp. and other oil wholesalers to seek alternative varieties, spokeswoman Kyoko Mukasa said.

Officials at seven of the other 10 regional power utilities said they plan to maintain purchases of Nile Blend for now because the crude is vital to run their power plants. The eighth, Okinawa Electric Power Co., doesn’t burn crude oil.

Tepco increased oil and gas use after a July 16 earthquake shut its Kashiwazaki-Kariwa plant, the world’s biggest nuclear power station, in Niigata Prefecture. The utility burned 120,000 kiloliters of Nile Blend in the year to March 31, or 10 percent of its 1.2 million kiloliters of crude used in the period.

“We have no plans to reduce or halt purchases of the Sudanese oil,” Tokyo Electric’s Oshima said.

Another price hike?

Nippon Oil Corp., Japan’s biggest petroleum refiner, may raise wholesale fuel prices in December after the cost of crude oil imports increased, Chairman Fumiaki Watari said.

Nippon Oil may hike prices for petroleum products, including gasoline, by about ¥5 a liter next month, Watari, who is also chairman of the Petroleum Association of Japan, told reporters Friday in Tokyo.

Benchmark crude oil prices in New York climbed to a record $98.62 a barrel on Nov. 7. Oil’s gains pushed retail gasoline prices in the world’s second-largest economy to an all-time high, raising concern that they may harm the nation’s growth.

Average retail gasoline prices rose to ¥150.1 a liter on Nov. 12, according to data compiled by the Oil Information Center, a trade ministry research body. That is the highest since the information center started its survey in 1987.

Coronavirus banner