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Wednesday, June 7, 2006
Japan said not ready for Iran oil halt
OSAKA -- Japanese oil industry experts warned Tuesday the country would be ill-prepared to deal with the impact an attack on Iran could have on the flow of Middle Eastern crude.
"The price of crude oil could spike at over $80 a barrel if Iran is the target of a military attack," said Tatsuya Yano, a Cosmo Oil Co. spokesman, speaking to reporters on the current state of the Japanese oil industry.
Yano disagreed with international oil experts who have warned the price per barrel could climb to $100.
"The market would pick up production in the event of an attack (on Iran), so I don't think the price will climb to that level," he said.
The Japanese oil industry's top concern is a possible U.S. attack on Iran, although any action against Iran could be damaging as that country is critical to Japan's strategy to tap oil fields in the Middle East.
"Even (international) economic sanctions on Iran could have a major impact on the price," Yano said.
Japan in 2005 imported nearly 34 million kiloliters of crude oil from Iran, about 15 percent of its total oil imports, making it the country's second-largest supplier after Saudi Arabia.
Japanese firm Inpex Corp. has an agreement with Tehran to develop the Azadegan oil field, the world's largest. Iranian state media recently reported Inpex may not be able to meet the Sept. 22 deadline to begin work on the field.
Japan imports nearly 90 percent of its oil from the Middle East. But the government and oil firms have no uniform plan to deal with disruptions if an attack on Iran ends up creating a quagmire like Iraq or there is a wider war in the Middle East.
"There are different suggestions from oil firms on how to deal with shortages or disruptions, but no broad general agreement," said Ikuo Hamabayashi, spokesman for the Petroleum Association of Japan.
"Firms have only talked about finding other suppliers to reduce dependence on Iran, or about stockpiling oil like America did last year after Hurricane Katrina wiped out the Gulf Coast refineries."
Japan has about 90 million barrels of oil in storage, enough to last four months at current consumption rates.