An Outline of Petroleum stockpiling in Japan

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An Outline of Petroleum stockpiling in Japan

• October 2001

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1. Current status of reserves in Japan(1/2)
9
17
7
61
53
67
81
84
20
45
51
54
56
74
75
85
85
76
42
7
24
31
35
61
79
93
94
85
92
98
101
99
98
96
90
82
80
74
86
77
57
80
97
98
91
90
88
86
84
82
76
77
As of the end of calendar year

• Second oil shock

• Gulf war

• First oil crisis

Major events

• Inauguration of IEA

• Introduction of oil reserve law

• Enactment of oil reserve law

Government stockpiling
30 millions kl policy(78)
50 millions kl policy(89)
Set-up to 70 day reserve policy plan(89)
Set-up to 60 day reserve policy plan(72)
Private sector stockpiling
Set-up to 90 day reserve policy plan(75)
Notes 1 Government and private sector
stockpiles are calculated according to the
inventory of oil products. Notes 2 Reserve days
figures are calculated according to the Petroleum
Reserve Law.
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2. Current status of reserves in Japan(2/2)
Reserve Policy
1971 Call for 60 day private sector stockpiling
by Consolidated Energy Assessment Association
1974 Call for 90 day private sector stockpiling
by Consolidated Energy Assessment
Association 1975 Achievement of 60 day public
sector reserves 1978 Call for start of government
stockpiling by Consolidated Energy Assessment
Association Official name JNOC decided Begin
government stockpiling tanker reserves
Consolidated Energy Assessment Association sets
30,000,000 kl government stockpiling guide
line 1981 Achievement of 90 day private sector
stockpiling 1983 National oil storage bases
partial completion 1985 End tanker
reserves 1987 Consolidated Energy Assessment
Association, Petroleum Reserve Review Committee
sets 50,000,000 kl government stockpiling guide
line 1989 Achievement of 30,000,000 kl government
stockpiling 1996 Completion of national oil
storage bases ten bases 1998 Achievement of
50,000,000 kl government stockpiling
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3. Outline of petroleum stockpiling system
Stockpiling in national oil storage bases
Joint reserves
Government Stockpiling
Private sector tanks leased by JNOC
Petroleum Stockpiling
Target of 50 million kl reached in Feb. 1998
Private oil refineries
Stockpiling by private oil companies
Private Sector Stockpiling
Obligatory inventory 70-day consumption
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4. The current state of Japans national and
private reserves
Authorized by Current reserve days (As of the
end of Dec.2000) Current reserve volume (As of
the end of Dec.2000) Holding make-up (As of
the end of Dec.2000) Existing reserve
goal Storage place Holding format Maintenance
etc.
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5.Implementation system of Government Stockpiling
METI
JNOC

• Stockpiling policy formulation
• Coordination within the government
• Decision making of draw down
• Ensuring budget for stockpiling

• Planning of implementation of government
  stockpiling
• Management of 8 national oil-stockpiling
  companies
• Coordination consultation with METI

8 National Oil-Stockpiling Companies
(Headquarters) Equity capital 70 JNOC and 30
private company (Note)

• Construction of oil-stockpiling bases
• Management of implementing oil stockpiling
• Planning of each fiscal years stockpiling
  activities
• Meet with JNOC, to get approval for the
  companies budget and activities each fiscal year
• Management of national oil-storage bases

10 National Oil-Storage Bases

• Management of stockpile oil
• Management maintenance of oil-storage base
  facilities
• Inspection of oil-storage tanks
• Safety disaster prevention training

Note In order to achieve completion of reserve
bases In the shortest time possible and to
achieve maximum utility and functioning of the
bases by efficiently utilizing public refineries'
human and technological resources, petroleum
refineries were selected to be the central
stockholders at JNOC.
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6. Petroleum storage method
Storage method
Advantages
National bases
Disadvantages
Above ground tanks
- Low construction cost - Technically simple to
construct
- Takes up space/ A large amount of land is
necessary
Mutsu-ogawara, Fukui, Tomakomai-tobu, Shibushi
- Compared to above ground tanks, construction
costs are high.
- The risk of large scale leak seepage is low -
Because the distance needed between tanks is
minimal, a more efficient use of space is
possible. (Since there are no depth limitations,
they can store 3 times the volume as above ground
tanks) - Extremely earthquake resistant. -
Blends into the landscape.
Akita
In ground tanks
- Compared to above ground tanks, construction
costs are high.
- Underground temperatures stabilize at 9? , so
that there is no need for humidification, thus
saving energy (costs). - Very little land is
necessary. - Very resistant to natural disasters
(earthquakes, lightening etc.) - The risk of
large scale leak seepage is low. - Blends into
the landscape.
Kuji, Kikuma, Kushikino
Underground tanks
- Compared to above ground tanks, construction
costs are high.
- Land acquisition is unnecessary.
Floating tankers
Shirashima Kamigoto
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7. Financial figure of petroleum stockpiling
Special account of METI
Commercial banks
Government fund
Capital financing
Interest subsidies
Loans
Loans
Principal and Interest payment
Principal and Interest payment
JNOC
Capital financing Loans Land leasing Base usage
fee
Capital financing
Principal payment Leasing fee for land
National petroleum and petroleum gas stockpiling
companies
National Reserves
Shifting of energy source consumption Account
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8. Concrete Methods of Oil Reserve Drawdown
(1/2)

• (1) First Use National Reserve should be Carried
  Out by JNOC
• Can Expect an Announcement Effect, Especially in
  the State of Pre-Emergency or CERM

1st Stage
2nd Stage
3rd Stage
Drawdown of National Reserve Reduction of
Private Reserve Obligation
Drawdown of Private Reserve
Massive Drawdown of National Reserve
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9. Concrete Methods of Oil Reserve Drawdown
(2/2)

• (2) Drawdown Objectives
• Oil Refiners
• (3) Drawdown Proceedings
• Bidding is the Standard Procedure
• (4) Drawdown Manual
• METI/JNOC have Created a new Drawdown Manual

Prevention of Speculation
Use of Market Mechanism