Japan will support the construction of oil pipelines that bypass the Strait of Hormuz, seeking to reduce its heavy reliance on Middle Eastern crude as the prolonged war involving Iran leaves shipping through the waterway unstable.
The government unveiled a comprehensive package to strengthen the country's energy supply structure, the Nihon Keizai Shimbun reported on the 25th. The plan is designed to diversify crude oil sources and reinforce energy supply chains as electricity demand climbs with the spread of artificial intelligence.
Under the plan, the government will provide development financing and technical cooperation to help build pipelines that circumvent the strait. The Japan Organization for Metals and Energy Security (JOGMEC) will oversee the support, working to back development entities that include Japanese companies.
Middle Eastern countries are moving ahead with their own workarounds. In the United Arab Emirates, Abu Dhabi National Oil Co. (ADNOC) plans to begin operating a new pipeline next year that can export crude while bypassing the Strait of Hormuz. Saudi Arabia is holding similar discussions.
The government will also launch indirect support measures. Refiners that procure crude through alternative routes will receive subsidies covering the additional shipping costs. Tokyo will also introduce a system under which the government backstops insurance payouts when Japanese property and casualty insurers cannot secure reinsurance contracts with overseas insurers. Prime Minister Takaichi Sanae last month instructed Economy, Trade and Industry Minister Akazawa Ryosei to draw up a plan to diversify energy sources.
The package also sets out goals including securing stable energy supply and demand in the AI era and raising the country's energy self-sufficiency rate. To expand stable energy sources, the government reaffirmed that it will pursue decarbonization while making maximum use of nuclear power. The plan targets replacing two to five reactors by the 2040s and adding nine more by the 2050s, for a total of 11 to 14 units.
