BY FILIPPO PEDRETTI
For many years, energy security was treated more as a theoretical exercise rather than a central priority. Market logic favored low inventories and cost efficiency, operating under the assumption that chokepoints like the Strait of Hormuz would always function properly.
This was true until the global oil trade came to a halt at the end of February when the U.S. and Israel launched attacks against Iran. For Japan, the closure of the Strait of Hormuz served as a reality check, threatening the rigidity of its industrial structure. Until that time, the Persian Gulf had supplied 93% of Japan’s crude oil imports.
The government acted quickly and decisively, boosted by a massive oil reservoir that covered over 240 days of consumption. By July, Japan had achieved a 100% procurement recovery of lost imports through a pivot to alternative suppliers across the globe. But the financial cost was significant, and hidden fragilities in supply chains, such as naphtha, were exposed.
The government had to overhaul its energy strategy, and announced new measures to be ready for the next challenge. Via METI, JOGMEC and a new working group, the government is preparing for the next challenge by rewriting its basic energy security plans.
Japan NRG identified four weak spots uncovered by the crisis of the past few months and the subsequent lessons that Tokyo has learned.