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Japan, which is poor in natural resources, is looking to strengthen its reserves strategy for oil and rare metals amid geopolitical tensions in the Middle East and Chinese dominance in rare metals exports.
An energy panel of the Japanese government recommended on Wednesday that the scheme for oil and rare metals reserves be strengthened, Reuters reports.
Japan, which relies on the Middle East for much of its crude oil imports, will aim to bolster its resource security with a new strategy expected to be drawn up by the industry ministry in 2020. The timing of the adoption of the new strategy, which is set to replace the reserves scheme from 2012, has not been decided yet, an official at the ministry told Reuters.
Japan is the currently the world’s biggest liquefied natural gas (LNG) importer and ranks in the top four countries for the highest coal imports, net imports of petroleum and other liquids, and consumption of crude oil and petroleum products, according to EIA data. In 2018, Japan was the world’s third-largest coal-importing country after only India and China.
Japan will continue to import significant volumes of LNG in the coming years, but it is likely to lose its top buyer status to the current number-two—China—as early as 2022, energy consultancy Wood Mackenzie said in July this year, attributing an expected decline in Japanese imports to competition from coal, nuclear, and renewables, and to slow economic growth.
In view of the heavy energy import dependence, the government panel has recommended reinforcing the strategy for energy commodity reserves, as well as for rare metals, given the ever-present potential threat that China—an increasingly dominant player in rare earth metals—could reduce rare metal exports.
The panel also recommended increased cooperation between various Japanese ministries to boost the country’s energy security.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.