Japan PM pledges $10 bil. in financial aid to Asia to tackle oil shortage
The Japanese government said Wednesday it will provide a total of $10 billion in financial support to other Asian nations to help them secure crude oil supplies as prices soar amid the Middle East conflict, aiming to ensure that petroleum-derived products made in those countries keep flowing into Japan, Kyodo reports.
The aid, announced by Prime Minister Sanae Takaichi following an online meeting with her counterparts mainly from the Association of Southeast Asian Nations, is aimed at beefing up energy supply chains across the region such as through loans for procuring crude oil and petroleum products as well as expansion of stockpiles.
"Japan is closely interconnected with each Asian country through supply chains and mutually dependent with them," Takaichi told reporters, adding that oil shortages or supply disruptions in Asia could have a "significant negative impact" on her nation's economy and society.
The planned financial aid is equivalent to up to 1.2 billion barrels -- about one year of crude oil imports by ASEAN countries, she said.
Japan imports petroleum-derived products from Southeast Asia, including items used at medical facilities. Many countries in the region maintain limited oil reserves, so there have been concerns that supply shortages could eventually affect shipments to Japan.
The surge in oil prices on the back of the war that led to a blockade of the Strait of Hormuz, a key waterway for global energy transportation, has raised concerns in some Southeast Asian countries over their ability to pay for imports.
Tokyo aims to address the risks through financial support, including loans via the government-backed Japan Bank for International Cooperation, according to government sources.
The Japanese prime minister emphasized that the latest supportive scheme does not include direct crude oil provisions from Japan's reserves and therefore will not negatively affect domestic supplies.
Given its high dependence on the Middle East for crude oil imports, Japan keeps abundant oil stockpiles in the country.
The other nations that joined the Japan-led, leaders-level virtual gathering were Australia, Bangladesh, Brunei, Cambodia, East Timor, India, Indonesia, Laos, Malaysia, the Philippines, Singapore, South Korea, Sri Lanka, Thailand and Vietnam.
After the meeting, the Japanese government issued the chair's statement, saying the participants "acknowledged that Asia is the most affected region by disruption in the supply of energy resources via the Strait of Hormuz" and agreed on the importance of ensuring safe passage through the channel.
It was reported, Japan plans to release an additional 20 days' worth of oil reserves starting in early May at the earliest, Prime Minister Sanae Takaichi said Friday, amid uncertainty over the reopening of the Strait of Hormuz despite the U.S.-Iran ceasefire deal.