Cablegate: Japan, New Zealand Sign Strategic Oil Reserve Pact

VZCZCXRO2524
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #5197 3130805
ZNR UUUUU ZZH
P 090805Z NOV 07
FM AMEMBASSY TOKYO
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UNCLAS TOKYO 005197

SIPDIS

SIPDIS

PARIS FOR OECD

E.O. 12958: N/A
TAGS: ECON ENRG JA PGOV PREL
SUBJECT: JAPAN, NEW ZEALAND SIGN STRATEGIC OIL RESERVE PACT

1. (U) Japan and New Zealand signed a pact November 5 which
allows New Zealand access to Japan's strategic oil reserves
for emergency use according to the Ministry of Economy, Trade
and Industry (METI). Under the agreement, New Zealand may
purchase up to 90,000 metric tons, or 659,700 barrels of oil
from Japan in 2008 and apply this amount towards the 90 day
strategic reserves required under its commitments to the
International Energy Agency (IEA). The contracted amount
represents approximately six days of supply for New Zealand
and 0.2 days of supply for Japan. In 2006, New Zealand
purchased 460,000 metric tons from the United Kingdom, the
Netherlands and Australia to meet its IEA commitments.

2. (SBU) According to METI Agency of Natural Resources and
Energy (ANRE) Deputy Director Kazuhiro Fukushima, this is the
first time Japan has ever entered into such an agreement and
there are no plans to conclude similar agreements with other
countries at this time. Fukushima stated should New Zealand
opt to purchase Japanese oil, the reserves would come from
Japan's private sector stockpile, not from national reserves.

3. (SBU) Petroleum Association of Japan (PAJ) Petroleum
Distribution Division Director Fumio Sato told an Embassy
economic assistant while the agreement allows the sale of
excess oil reserves, industry is "not particularly
enthusiastic" with the small volume and the prospect of a low
sale price due to competition from other countries,
particularly the U.K., the Netherlands and Australia. Sato
said Japanese companies were requested to place bids before
November 5, but he did not know whether any had been
submitted.
SCHIEFFER

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