The problem arose because all shipping companies operating ships within Japan’s territorial waters must be covered by liability insurance against accident-related damage, including oil spills. This legislation averted a potential crisis caused by a shortage of oil.
“Japan needs to compensate for nearly 30 percent of the electricity it lost as a result of the Fukushima nuclear accident,” said Akio Shibata, president of the Tokyo-based National Resource Research Institute. “Fossil fuels and gas are now being used to provide Japan’s daily supplies.
“About 80 to 90 percent of these come from the Middle East and Iran is an important exporter. Japan needs Iranian oil as part of a stable oil supply, so the government is creating a framework to allow continued purchases, despite the EU sanctions.”
The bill is expected to go through the upper house and become law before the parliamentary session ends on June 21.
“Japan imports about 350,000 barrels of crude oil per day from Iran,” Shibata said. “If we lost Iran’s oil supply, we would have to ask Saudi Arabia and Qatar to replace it, but we don’t know if they have the capacity to provide all of it. The global impact would result in rising crude oil prices.
“In addition, it might cause Japan’s economy to stall, especially after it is showing signs of post-earthquake recovery.”
Japan has just passed the insurance hurdle. But it remains to be seen if the European Union and the United States will be as understanding in the future regarding Japan’s energy and economic needs, according to Shibata.