Japan reported a trade surplus of US$35.8 billion (4.1 trillion yen) for 2016, thanks to much cheaper oil. This is the first trade surplus for the country, which is one of the top five consumers of oil, since 2011 after it slipped into a deficit following the Fukushima nuclear disaster.
At the time, Japan was forced to substantially increase its imports of crude oil, as it lacks any meaningful natural resources, yet is very power-hungry: the country’s 2015 oil consumption was estimated at 4.5 million barrels daily. In this context, Japan was one of the winners from the 2014 oil price crash, which while pounding major exporters into the ground, helped it prop up its trade accounts.
Overall imports for 2016, according to the AP, were US$581 billion (66 trillion yen), down by 16 percent on 2015. Exports, on the other hand, slipped by 7.4 percent to US$617 billion (70.04 trillion yen).
Because of its dependence on imported oil, Japan has been active in ensuring long-term supplies and seeking new, alternative sources of crude, such as Iran. There were five Japanese energy firms on a list of 29 that were approved by the National Iranian Oil Company to bid in coming oil and gas field development tenders.
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One of these, Inpex, has recently begun “intense negotiations” for the development of the Azadegan field—one of five that Iran shares with Iraq. According to a senior Iranian official, quoted by the Japan Times, the company has a very good chance to win the contract for Azadegan. The company previously took part in its development but pulled out in 2010 after the imposition of Western sanctions on Tehran over its nuclear program.
Now that Iran needs foreign investments and modern technology to put its oil and gas industry back on its feet, Japan would certainly be a welcome partner for the local state companies.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.