KUWAIT/TOKYO: Japan and Kuwait will create a joint petroleum reserve for energy-hungry Southeast Asia, which lacks sufficient buffers against oil supply instability. Japan's Agency for Natural Resources and Energy and the state-run Kuwait Petroleum Corporation (KPC) signed an agreement Tuesday on the project, the Japanese Ministry of Economy, Trade and Industry (METI) said in a statement.
For Japan, the roughly 500,000-kiloliter stockpile on its own soil will help ensure that the nation's companies operating in Southeast Asia keep their supply chains functioning during an oil supply disruption. The reserve will contain about 3.14 million barrels, or roughly 1.5 days of Japanese petroleum consumption, according to METI. It will be housed at Japanese refiner Eneos' Kiire storage yard in southern Japan's Kagoshima Prefecture, in tanks loaned to KPC, Nikkei Asia reported.
For Kuwait, the agreement comes in line with KPC's 2040 strategy to secure the storage of crude oil outside of the country, as well as enhancing its plans and marketing share in the Far East region as a major supplier, Deputy Managing Director of International Marketing Operations KPC Ghadeer Al-Qadfan said. "With this deal, Kuwait joins Saudi Arabia and the UAE in storing its oil in Japan for strategic and commercial purposes, taking into account the priority of supplying Japan with crude oil in case of an emergency," she said in a statement to Kuwait News Agency (KUNA).
In the event of terrorist attacks or other emergencies that disrupt the oil supply, Japan will have priority access to the reserve, which can be shared with Southeast Asian and other countries. The oil for the reserve is due to arrive from Kuwait by the end of March. Southeast Asia's energy demand is forecast to continue rising, and, like Japan, the region relies heavily on Middle Eastern oil. Many Southeast Asian nations lack ample oil reserves, putting companies operating there at risk of interruption.