Japan's METI sees energy prices staying high, stresses security

Tokyo (Platts)--6Jun2006

Japan's Ministry of Economy, Trade and Industry expects energy prices to
remain high mid- to long-term because the back end of the crude oil futures
curve, representing deliveries several months out, has shifted higher, METI
said in its annual report released Tuesday.
Also, crude prices could stage unexpected spikes in future because of the
influx of speculative money, political concerns, natural disasters and further
tightening of supply, METI warned in its report.
"With the assumption that global tightness in energy supply-demand and
high crude oil prices will remain, our country needs to tackle the energy
security issue," the ministry said.
As a part of Japan's efforts to secure energy, METI's affiliate Agency of
Natural Resources and Energy last November signed an agreement with Russian
gas giant Gazprom calling for cooperation in energy issues between the two
countries.
Japan also agreed to strengthen cooperation in energy and other natural
resources sectors with Brazil in May 2005, when Brazilian President Luiz
Inacio Lula visited Japan.
Apart from agreements with energy exporting countries, Japan and China
have been holding bilateral discussions at different levels since October 2004
in an effort to resolve their dispute over gas fields in overlapping waters of
the East China Sea.

INCORPORATES RECENT LESSONS IN ENERGY ROADMAP
Japan recently formulated a new energy strategy to the year 2030, which
is centered around boosting upstream investment, adding refined products to
the government's strategic oil stockpiles, and reducing the country's oil
dependency, among other goals.
Meanwhile, Japan has also drawn lessons from the aftermath of the twin
hurricanes Katrina and Rita that rocked the US Gulf Coast in August and
September last year, regarding the importance of avoiding bottlenecks in any
part of the oil supply chain -- crude oil production, transportation, refining
and retailing.
"Amid global integration of crude and petroleum product markets, we
became aware of the importance for consuming and producing countries to work
on stabilization of the market," the ministry said in its report.
As part of the International Energy Agency's initiative to ease supply
tightness in the markets after the hurricanes, Japan had released 7.32 million
barrels from oil products stocks held by the private sector following the
hurricanes.

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