Japan prepares to pay for oil’s long way round
Japan's cabinet approved three bills to diversify energy imports, support tanker insurance and finance alternative oil transport infrastructure. One bill would establish a grant scheme, administered by JOGMEC and funded by contributions collected from oil importers, to compensate refiners, trading houses and petrochemical companies for part of the additional cost of sourcing crude and petroleum products from alternative suppliers. A second bill would have Tokyo partially cover hull and cargo insurance claims where international reinsurers cannot provide cover because of geopolitical risks, and extend government-backed protection and indemnity arrangements beyond crude oil to petroleum products and LNG, while a third would give JOGMEC powers to invest in and guarantee financing for overseas pipelines providing alternative export routes.
Why it matters: The package makes energy security the organising frame of Japan's response to disruption in the Strait of Hormuz, on which government figures put 93% of its crude import dependence.