Japan approves bills subsidising crude imports bypassing Hormuz

Japan’s cabinet approved three energy security bills on Tuesday that would pay refiners and trading houses grants covering the extra transport costs of importing crude oil and naphtha on routes that avoid the Strait of Hormuz, with the program funded by levies on the industry itself and operators required to file procurement plans in advance. The package also creates a government backstop when Japanese insurers cannot obtain overseas reinsurance for tanker cover, and lets the state energy agency JOGMEC take equity stakes and provide debt guarantees for pipelines built to bypass Hormuz.

Industry Minister Akazawa presented the bills as a diversification measure after Japan’s oil import bill hit record highs, with the country now sourcing cargoes from as far as Canada, Azerbaijan and Africa to replace Gulf supply that previously accounted for the great majority of its crude imports. The bills go to the ongoing extraordinary Diet session, and the main subsidy law is slated to take effect within six months of promulgation if passed.