Japan targets Vietnam for first Asean oil-sharing deal

Japan targets Vietnam for first Asean oil-sharing deal

Japan aims to bring Vietnam into what will be its first oil-sharing deal with a south-east Asian nation, a government source told Nikkei, as Tokyo seeks to ensure an uninterrupted supply of petroleum to overseas supply chains in the event of a disruption.

The deal is part of Japan's attempt to build oil-sharing arrangements with members of the Association of Southeast Asian Nations. Under one proposal, each participant would build up individual reserves of crude oil, along with gasoline, diesel fuel and other petroleum products, to prepare for disruptions in supplies.

Both Japan and Asean countries rely heavily on Middle Eastern oil. But while Japan maintains a petroleum reserve that will cover domestic consumption for more than 200 days “” a lesson from the 1970s energy crisis “” some south-east Asian nations are said to have only a month's supply.

More than 60 per cent of crude shipments to the Asia-Pacific region come from the Middle East, according to BP. The vulnerability of these flows to stoppages was underscored last month when a massive cargo ship became stuck in the Suez Canal disrupting supply chains, from cattle to crude. This is a risk faced by Japanese automakers and other manufacturers with operations in south-east Asia.

The Japanese government has first approached Vietnam with an oil-sharing