Japan to reduce its importing of Iran oil
Japanese officials pledged Thursday to buy less Iranian oil in a nod to Washington’s campaign to sanction Tehran over its nuclear program.
The announcement came after lobbying by U.S. Treasury Secretary Timothy F. Geithner, who met with officials in Tokyo a day after Chinese leaders had rejected a similar plea to support the sanctions.
The Iranian “nuclear development problem can’t be ignored by the world, so from that perspective we understand the U.S. actions,” Finance Minister Jun Azumi told reporters after meeting with Geithner.
Japan imports 10% of its oil from Iran, but Azumi said itwould begin “reducing this 10% share as soon as possible in a planned manner.”
Geithner visited China and Japan to win support for the American sanctions targeting Iran’s oil industry; the sanctions bar financial institutions from the U.S. market if they do business with Iran’s central bank. In response, Iran has threatened to close the Strait of Hormuz, a move that would block the transit of one-fifth of the world’s oil.
Tokyo has acquiesced to previous U.S. pressure to limit its dealings with the Iranian energy sector. With almost no domestic fossil fuel production, Japan aggressively pursues joint oil and gas ventures overseas, and its state-owned exploration company, Inpex Corp., had planned to be a major developer of Iran’s Azadegan natural gas field.
But facing the prospect of being denied access to U.S. financial institutions, Inpex abandoned its stake in the project in 2010.
The most recent U.S. request poses a dilemma for Japan and South Korea, both close allies of Washington but heavily dependent on imported fuel. For Japan, adhering to a new round of U.S. sanctions on Iran would imperil that crucial energy source at a time when Japan’s nuclear industry is in retreat after the earthquake and tsunami last year that closed the Fukushima Daiichi atomic power plant.
But experts predict that Japan may be able to offset any oil reductions by increasing imports from other major producers.