Japan unveils US$10bn support package to help ASEAN secure oil

Japan said on Wednesday that it would create a financial support framework worth about US$10 billion to help Southeast Asian countries secure energy resources such as crude oil, as tensions in the Middle East push up energy prices and disrupt supply chains, according to Reuters.

The package is aimed at helping protect Japan’s own supply chains and will be channelled mainly through government-backed institutions, including the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI). Tokyo has not yet given further details on the exact form the assistance will take.

Speaking after the online Asia Zero Emission Community (AZEC) Plus summit, attended by leaders from the Philippines, Malaysia, Singapore, Thailand and Vietnam, Japanese Prime Minister Sanae Takaichi said the package was equivalent to as much as 1.2 billion barrels of crude oil, roughly matching ASEAN’s annual crude imports.

Takaichi said Japan was closely linked with other Asian countries through supply chains and other channels, and that support for Asia’s supply chains would also strengthen Japan’s economy. Reuters said the assistance is intended to help offset funding and credit constraints faced by some countries in securing crude supplies.

Compared with Japan, many Southeast Asian countries hold smaller oil reserves, raising concerns over tighter supplies of crude and petroleum products such as naphtha, a key feedstock for plastics. Reuters said this has increased concern among Japanese healthcare suppliers, which rely on Asia for essential items such as containers, tubing and gloves.

Japan’s government has said about 90% of crude oil shipped through the Strait of Hormuz is bound for Asia. Tokyo has also said it plans to release an additional 36 million barrels from its strategic reserves from early May, but Takaichi stressed that the new support arrangement is separate from any reserve release and would not affect domestic supply.