Gulf crude exports to Japan suspended
Dubai, March 16, 2011
Oil exports to Japan from the Gulf region have been temporarily halted after an earthquake struck the world's third-largest oil consumer though order volumes are unchanged, Gulf officials said.
Ports in northeastern Japan were damaged and could be closed for months and around a third of the country's refining capacity of 4.5 million barrels a day (bpd) was idled after the quake and tsunami on Friday.
That has prompted big Gulf region crude exporters, including Saudi Arabia, Kuwait and the UAE, to suspend new crude shipments to Japan, officials were quoted as saying in a report in our sister newspaper Gulf Daily News (GDN).
'Things are so uncertain now, and with the ports shut down, we have rescheduled all crude shipments going to Japan, but so far there have been no changes to the order volumes,' an official from state-owned Kuwait Petroleum Company (KPC) said.
Producing countries said they are ready to dispatch tanker loads of both crude and oil products as soon as Japan's ports are ready to receive new import volumes.
Nearly 80 per cent of Japan's oil is imported from the Middle East region, data from the International Energy Agency (IEA) shows.
With some of its refineries idled, Gulf producers expect a rise in Japan's demand for oil products.
Product demand may also rise as Japan restores electricity to areas hit with blackouts, since nuclear plants that generate a third of Japan's power have been idled and the country is scrambling to control radiation leaks from reactors.
'As far as we have been informed, there has been no damage to the refineries. They have just been put off-line as a safety precaution, but if more products are needed, Kuwait is ready to supply Japan,' said the KPC official, adding that Japan is currently able to tap its strategic oil products stockpile.
The UAE is also ready to resume shipments and boost product supply to Japan if asked, an official said.
'We are willing to supply Japan, with crude or any other products they need,' he said.
The official said some Japanese oil terminals are open, but those aren't sufficient to receive normal volumes of crude.
'Some smaller terminals are open, but the services there are not as good given the situation,' he said.
Top exporter Saudi Arabia is ready to resume shipments any time, an official said.
'We are committed to meeting any extra demand by Japan if needed, but only if their infrastructure and refining capacity can allow it.'
Qatar is the best positioned Gulf state to meet any increased need for liquefied natural gas (LNG) which Japan might have.
State-controlled Qatari LNG firms Qatargas and Rasgas said they could make up for Japan's nuclear power loss which will mean relying more on gas-fired plants.