Tokyo in crisis search for oil after Iran blow

Press, 23 April 1980, Page 8

Tokyo in crisis search for oil after Iran blow

NZPA-Reuter Tokyo The Japanese Government has begun searching for ways to make up a shortfall in oil supplies caused by the suspension of Iranian shipments to Japan. Cabinet Ministers concerned with energy supplies decided tentatively at an urgent meeting yesterday to tap Japan’s 95-day oil stockpile while trying to increase imports from other sources, according to Government sources.

The International Trade and Industry Minister (Mr Yoshitake Sasaki) told the meeting that it would not be easy for Japan to meet its oil import target of 17,600 million barrels for the financial year which began this month, according to the sources.

Apart from increasing imports from other sources and delving into the stockpile, Japan could also boost its purchases of crude oil from the more expensive spot market without disturbing market conditions, the sources said.

Iran suspended oil shipments to Japan after Japanese importers refused to accept a price increase of SUS2.SO a barrel which would have boosted the cost of Iranian light crude to SUS3S a barrel. The Japanese Government said it considered the new price too high, especially when compared with a cost of SUS 26 a barrel for Saudi Arabian light crude. Japan imports virtually all [ of its Oil, the bulk coming from Saudi Arabia and neighbouring countries. It had been buying about 520,000 barrels a day from Iran, or 10 per cent of its needs.

This made it Iran’s biggest single oil customer, as well as its largest trading partner since United States sanctions were imposed to help to secure the release of American embassy hostages held in the Iranian capital.

Trade Ministry sources noted that Iran had stopped short of cancelling its contracts with 12 Japanese im-

porters, thus raising the possibility of negotiations between the two sides. The sources said the Ministry had instructed importers not to accept the new price because of slack domestic demand for oil products and possible international criticism of Japan’s buying higher-priced crude. They said six Japanese importers, which have representatives in Teheran, were expected to continue, talks with the National Iranian I O’’ Company on the assumption that the stoppage in shipments was only temporary.

The Government, mindful of the aftermath of the 1973 oil crisis which saw panic buying and commodity hoarding in Japan, urged the Japanese people to redact calmly to the new crisis. It said enough oil could probably be shipped to Japan, barring unforeseen circumstances.

Informed sources said Japanese oil companies and trading firms would divert Iran-bound tankers to other

unspecified oil-producing countries. r A spokesman for the Mit? sui industrial group said it still planned to proceed with a joint venture to complete a. $3200 million petrochemical complex at Bandar Khomeiny, southern Iran. But he would neither confirm nor deny a Kyodo news service report that Amir Nasser Kouhyar, a representative of the Iranian side, had - warned Japan that Iran would take measures against the project if Tokyo joined the United States economic sanctions. The spokesman said the project, now 85 per cent complete, had become a political issue and that the Mitsui group would have to change its attitude if the Japanese Government altered its policy, Th-j Iranian President (Mr Abolhassan Bani-Sadr), in an interview published yesterday, called on Arab oil producers to establish an independent bloc capable of dictating its wishes to all adversaries.