Japan considering alternative oil supplies

Imminent international sanctions on Iranian oil exports aimed at pushing Tehran into giving up its nuclear programme have left resource-poor Japan searching for alternative supplies, officials said today.

With virtually no fossil fuels of its own, energy-hungry Japan is heavily dependent on West Asia, with Iranian oil accounting for nearly nine% of its power needs in the first 11 months of last year.

Unlike its major allies, Tokyo has maintained a working relationship with Tehran, but the EU and the US are now stepping up efforts to squeeze Iran over what they believe is a nuclear weapons programme under the guise of a civilian power project.

That has led to pressure on Japan to look elsewhere for its oil, with Tokyo's largest supplier, Saudi Arabia an obvious choice.

An official at JX Nippon Oil & Energy, Japan's biggest petroleum refiner, said it would cope with a ban on Iranian crude oil by "switching to imports from other Middle East countries and other regions including West Africa."

"We are talking with Saudi Arabia and other oil producing countries about measures in the event of a problem arising in Iranian supplies," the official told AFP.

"But we cannot give you details on what we are discussing."

Japan's industry minister Yukio Edano said the world's third biggest economy was prepared to "make efforts to minimise the impact (of such an oil embargo) on our country and the world economy."

"We are not at a stage where we should answer a hypothetical question," the minister of economy, trade and industry told a regular news conference.

"But, as a matter of course, we are making preparations by taking every possibility into consideration."

Foreign Minister Koichiro Gemba yesterday left for an eight-day trip to Turkey, Saudi Arabia, Qatar and the United Arab Emirates for talks expected to focus on the Iranian oil problem.

US Treasury Secretary Tim Geithner, due to visit Tokyo next Thursday after a trip to Beijing, is expected to press the point further when he meets Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi.

President Barack Obama signed a Bill into law at the end of December empowering US authorities to impose penalties on foreign banks dealing with the Central Bank of Iran to settle oil imports.

The central bank has accounts at some major Japanese banks for oil trade settlements, Kyodo news agency said. For Iran, Japan is the third biggest buyer of its oil after China and India.