May 19, 2014 2:00 pm JST

METI to modify LPG reserve requirement

TOKYO -- Officials at Japan's Ministry of Economy, Trade and Industry plan to ease the requirement on reserves of liquefied petroleum gas. The ministry aims to establish a new system to calculate the required amount to be stockpiled by the end of this year.

     Under the current Oil Stockpiling Act, the government is required to stockpile a quantity of LPG equal to 40 days' daily average imports over a year. Private sector LPG companies are required to maintain their compulsory stockpiles of 50 days' daily average imports over a year.

     Japan now imports 80% of its LPG, which it uses as fuel for household gas and electric power generation, from such Middle Eastern countries as Qatar and the United Arab Emirates. But the government aims to increase imports from more politically stable countries at cheaper prices.

     Under the new calculation method, the amount of LPG required to be stockpiled can be reduced depending on the safety of the transportation route. When the gas is imported from low-risk countries, such as the U.S. and Australia, the government will deem that the stockpile is larger than actual reserves.

     The private sector's reserve as of February this year, including distributor's stock, stood at roughly 1.78 million tons, representing more than 10% of the domestic demand. The new stockpiling requirement will reduce real LPG reserve of businesses, helping them to slash their storage costs.