TOKYO -- The Japanese government is considering increasing by up to 250% the amount of joint petroleum reserves the country keeps with oil-producing nations in order to reduce maintenance costs.
Japan currently maintains oil reserves equivalent to two days worth of imports in collaboration with Saudi Arabia and the United Arab Emirates. The plan is to raise the volume to a maximum seven days of imports.
The roughly 1 million kiloliters of oil reserves are kept in Okinawa and Kagoshima prefectures, which have a combined storage capacity of 5 million kiloliters and thus can take in more.
The Ministry of Economy, Trade and Industry will start negotiations with the two countries by the end of the year to determine the size of the increase. It may also include Kuwait and other oil-producing countries in the arrangement to diversify its procurement sources.
Under the program, oil-producing countries use bases in Japan to store oil and can sell up to half the amount of the reserves. But in times of emergency, Japan will be given priority access to the reserves.
Separately, Japan keeps strategic oil reserves equivalent to 91 days of imports, and private companies have 71 days' worth. While the joint reserves are currently not counted toward either of those reserves, they will be included in the national reserves under a new arrangement.
The government spends roughly 75 billion yen ($728 million) a year on maintaining its reserves. By expanding the joint reserves in which oil-producing nations shoulder maintenance costs, it can slash the burden by several billion yen a year.
For their part, the partner countries can use Japan's facilities to boost exports to China and other Asian markets.