Japan to withdraw crude tariff, products tariffs under review

Tokyo (Platts)--8Dec2005

Japan plans to eliminate its crude oil import tariff of Yen 170/kl
($0.22/bbl) at the end of current fiscal 2005-2006 (April-March), while
tariffs on refined petroleum products are still under discussion by a
deliberation council, an official at the Minister of Finance told Platts
Thursday. 
     "It is likely that we will change import duty on refined products in line
with the abolishing the crude tariff at the end of March," the official said. 
     "We are trying to work out details on products tariffs at the next
council meeting which will be held sometime in mid-December. The council will
compile a verdict over the duty for products import at the meeting," he added.
According to Japanese refinery sources that meeting is scheduled for next
week.
     Industry sources expected abolishment of the Yen 170/kl crude tariff to
have no impacts on Japan's crude imports or consumption as "the amount of the
duty is negligible to begin with."
     However, trading sources are keeping their eyes on possible changes to
import duties for refined products, especially for high sulfur fuel oil as it
is the most heavily levied among all the refined products.    
     Japanese government currently imposes Yen 3,202/kl ($4.18/bbl) tax on
HSFO imports, on top of a "petroleum tax" of Yen 2,040/kl ($2.66/bbl) which is
not presently subject to review. The "petroleum tax" is equally imposed on all
the refined products and crude oil imports to Japan to fund financial resource
for the country's natural resources exploration, stockpiling and development
of alternative energy.
     Markets for domestically produced HSFO has been secured for local
refiners because the high HSFO tariff has been an obstacle for HSFO imports,
trading sources said. Refiners always need a market for HSFO to maintain their
production of clean products, including naphtha, gasoline and middle
distillates, as they get unprofitable HSFO as a byproduct as a result of the
crude oil refining process, they added.
     Japan imported 324,941 kl (2.04-mil bbl) of HSFO since the beginning of
2005 through Dec 3, according to the Petroleum Association of Japan. The PAJ
data also showed Japan's low sulfur fuel oil imports were 10 times larger
than HSFO at 3.28-mil kl during the same period.   
     "Although it is still unclear how the government would changes the HSFO
duty, I can easily imagine a big impact if they cut the duty. Refiners may
have to review their crude processing plans to get rid of HSFO output as part
of domestic HSFO demand could be covered by imports," a fuel oil trader said.
     Tariffs for crude oil and refined petroleum products in Japan are as
follows: 
              Tariff (Yen/kl)   Tariff ($/bbl)
Crude Oil          170               0.22
Gasoline         1,257               1.64
Kerosene           564               0.37
Gasoil           1,386               1.81
LSFO             2,376               3.10
HSFO             3,202               4.18

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.