South Korea and Japan to Pursue Crude Oil and Petroleum Product Swaps, Build Reciprocal Supply System

\r
[The Financial News]  
\rSouth Korea and Japan are moving to pursue crude oil and petroleum product swaps, along with a reciprocal supply system. As geopolitical risks from the Middle East continue to weigh on the global energy market, the two countries are stepping up cooperation on energy security beyond supply chain cooperation.
On the 19th, the Ministry of Trade and Industry said it had drawn up a joint cooperation framework with Japan's Ministry of Economy, Trade and Industry (METI) to strengthen cooperation on energy security and supply chain resilience, in connection with the summit between the two countries.
The two sides will first encourage public-private dialogue so that smooth cooperation can take place in the event of an emergency in the crude oil and petroleum product sectors. Specifically, they plan to promote crude oil and petroleum product swaps and reciprocal supply, as well as cooperation in crude oil procurement and transportation. The framework is also expected to include provisions calling for mutual supply of related products in a crisis and restraint from unnecessary export restrictions.
South Korea and Japan are also set to expand cooperation on liquefied natural gas, as they are the world's third- and second-largest LNG importers, respectively. Earlier in March, KOGAS and JERA, Japan's largest power generation company, signed a memorandum of understanding on LNG supply cooperation in Tokyo. Based on that agreement, the two governments plan to further expand and deepen LNG supply cooperation.
Supply chain cooperation will also be strengthened further. The Ministry of Trade and Industry and METI agreed to reinforce supply chain resilience cooperation in key industrial sectors and upgrade crisis response mechanisms, based on the Korea-Japan Supply Chain Partnership signed in March by Minister Kim Jung-kwan and METI Minister Ryosei Akazawa.
The two countries also agreed to explore the possibility of energy supply resilience cooperation at the regional level in Asia through Japan's proposed Asia Energy and Resource Supply Chain Strengthening Partnership. A range of cooperation measures, including stockpiling, is expected to be discussed.
To that end, the two sides will launch the Japan-ROK Industrial and Trade Policy Dialogue, with senior officials participating, and institutionalize regular government-to-government discussions.
The government said, "We shared the view that cooperation in energy security and supply chain resilience needs to be strengthened amid growing uncertainty," adding, "We will jointly seek practical cooperation measures to flesh out follow-up steps to the discussions between the two leaders."
\r
aber@fnnews.com Park Ji-young Reporter