Japan’s government approved three bills on Tuesday intended to broaden its oil supply options, including grants to help importers meet higher shipping costs when purchasing from alternative sources, OilPrice.com reported. The proposals will next go before the Japanese Parliament for debate, as the country seeks to reduce the risks associated with its existing supply routes.
Industry Minister Ryosei Akazawa said the legislation was designed to strengthen supply security by widening the range of suppliers of crude and other fossil fuels, according to Reuters reporting cited by OilPrice.com. The measures target both the additional expense of changing procurement arrangements and the transport infrastructure and insurance needed to sustain deliveries.
At a press conference the previous week, Akazawa had outlined support for extra costs arising from changes to crude transport routes, including higher freight expenses. He also described provisions to ensure suitable insurance arrangements for the reliable movement of crude and other petroleum-related resources, alongside assistance for developing alternative routes, including pipelines.
The initiative comes as Japan faces a record oil import bill following the closure of the Strait of Hormuz, according to OilPrice.com. Higher crude prices, freight rates and insurance costs have compounded the financial impact of disrupted supplies. The Middle East war has pushed Japan to look beyond its established suppliers to replace cargoes that remain trapped in the Persian Gulf.
Replacement purchases now include cargoes from Canada, Azerbaijan and Africa, the outlet reported. Those more distant sources offer alternatives to disrupted Gulf deliveries, but securing them carries a substantial economic cost. OilPrice.com said the rising import bill was putting pressure on industrial activity and the wider economy.
Japan has also begun releasing crude from strategic inventories as part of an International Energy Agency-coordinated effort to make 400 million barrels of crude and petroleum products available globally. The reserve releases accompany its search for alternative supplies, while the proposed legislation would address the added costs and logistical risks of diversifying procurement.