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World energy problems and Japan's international role
World energy problems and Japan's international role Masao Sakisaka The need for reliable, secure supplies of oil now dominates energy policy considerations in the large consuming countries. In this article, Mr Sakisaka assesses the problems that have to be solved and suggests ways in which Japan and other consuming countries should cooperate. He sees this cooperation as an extension of activities within OECD rather than as the setting up of a separate organisation. Mr Sakisaka is President of The Institute of Energy Economics, No. 10 Mori Building, 28 Nishikubo Sakuragawa-cho, Minato-ku, Tokyo, Japan.
Security of oil supplies The present 'energy crisis' in North America, Japan and Western Europe is basically a matter of whether or not additional oil reserves can be found in sufficient quantities. But even if enough new deposits were found it would not be the end of the crisis. There would still be a continuing need for reliable, secure supplies o f oil, and these supplies are being threatened by a number of interconnected developments.
Participation Great changes are taking place in the oil-supply mechanism. The governments o f the oil-producing countries have turned from being mere collectors of tax from the oil industry to assuming the position of control. Oil-producing nations, urged on by growing nationalism, are strengthening their hold over the oil industry through nationalisation of the industry on their soil, participation in oil business, and conservation of resources. The unstable political situation in producing countries and the tendency to use oil as a means to achieve political or economic goals must remain a cause for concern in the consuming countries. The influence of the international oil companies will be weakened by these changes and their ability to respond to the international supply-demand situation will gradually lessen. These oil companies are becoming less and less able to guarantee long-term oil supplies. Consuming nations which have relied on the major oil firms for supply are n o w facing an increasingly uncertain future.
US oil imports and competition for supplies US imports o f oil which are expected to continue to grow over
a long period of time will have a tremendous impact on the world market. The expected sharp increase in these i m p o r t s - mainly from Africa and the Middle East - over the next few years will result in a strained supply-demand situation and may make it difficult for other countries to buy petroleum in the long term. These other consuming countries are haunted by fears that the USA, using its influence through the Government and major oil firms over Iran and Saudi Arabia, may out-manoeuvre them in securing supplies of oil. This fear is intensified by the current preoccupation of Washington with the security of its energy supplies. 100
E N E R G Y P O L I C Y September 1973
World energy problems and Japan's international role
Fear of American competition for supplies is liable to drive oil-consuming countries to approach producing nations on their own. Under such circumstances, consuming nations are closely watching what new policy the USA may adopt on development of domestic resources and what diplomatic approaches it will take for securing other energy resources. In the. future, international friction could occur over the supply of oil. On the one hand, consumer nations will continue to depend for the purchase of oil on the major Western oil firms which have worldwide supply sources. On the other hand, however, there is a possibility that an intense race will develop among consumer nations for the crude oil that producing countries can offer. Western Europe and Japan are likely to approach producing countries for direct purchase of crude oil offering package deals for the development of oil fields, and joint ventures and Government-backed economic and technological cooperation to support their offers. And the USA will find it in its interest to maintain as much as possible the influence of its major oil companies over the oil market and at the same time will work to improve its diplomatic relations with Arab countries. Especially, it will continue its economic and military assistance to Saudi Arabia and Iran, the two major oil-supplying nations, and depending on developments, may offer package deals to particular oil-producing countries. The Soviet Union is likely to try to strengthen its political influence over Africa and the Middle East to improve its bargaining position with the USA. Such competition among oil-consuming countries and the Soviet Union in relation to the oil-producing nations could not only lead to oil prices rising above a reasonable level but could also cause political commotions within, and frictions among, producing countries, thus making supplies uncertain. Also, after the termination of the Teheran Agreement in 1975, the price of oil may rise sharply. This would create a major problem for industrialised countries, but the effect on developing nations which have no oil resources would be even worse.
International monetary problems The rising price of crude oil, increasing imports of oil by consuming nations, and participation in and nationalisation of the oil industry by producing countries, all bring about a major change in the international monetary flow and balance of payments of world countries. Eleven members of the Organisation of Petroleum Exporting Countries (OPEC) will have about $50 000 million revenue from crude oil if they produce sufficient to meet the demands of consuming countries over the next 10 years. The bulk of these vast earnings will be spent for economic and social development in these oil-producing countries and for import of capital and consumer goods from industrialised countries. But there is a possibility that a substantial foreign currency surplus will be piled up in some Persian Gulf countries. For instance, Saudi Arabia will have about $150 000 million revenue in the 10 years up to 1985 according to our estimate. Even if one half of the
ENERGY POLICY September 1973
101
World energy problems and Japan's international role
revenue were spent on domestic development (this is 80% larger than the estimate made by Prince Saud), there remains about $70 million foreign currency surplus. This estimate is based on the assumption that Saudi Arabia will continue increasing its oil production until it reaches 29 million barrels per day by 1980 and that the production volume will then level off. However, if such a big foreign reserve surplus actually comes about, Saudi Arabia may change its policy and go for conservation. Oil-producing countries are most likely to adopt a policy of deciding the oil production programme by weighing their need for funds for economic and social development against the growing value of remaining reserves of oil. To satisfy the growing demand for oil in consuming countries, a sharp increase in oil production in the Middle East, and especially in Saudi Arabia is a prerequisite. Realising this, industrialised nations should offer aid to producing countries. At the same time, it will be necessary, as called for by Sheik Yamani, the oil minister of Saudi Arabia, to help the oil-producing countries find profitable fields of investment, such as the overseas oil industry, so that they could best use their surplus foreign currency reserves. The utilisation of the huge foreign currency reserves that will accumulate in producing countries is a venture, not only in the interests of consuming countries for securing their oil needs. It will be a key issue in correcting the present imbalance in economic welfare between industrialised and non-industrialised nations, as well as for maintaining equilibrium in the international monetary system. The present international picture - industrialised countries enjoying trade surplus, developing countries suffering trade deficits and balancing the two by economic aids from the former to the l a t t e r - w i l l change to a new relationship under which industrialised nations (especially the USA) would either suffer a trade deficit or lose much of its surplus because of increased oil imports. Under this system, developing nations, which are not oil producers, would further increase their deficits and oil-producing countries would accumulate a huge surplus. In view of this, can OECD nations fulfil their obligation of giving 1% of their GNP to the aid of developing countries pledged by the Development Assistance Committee? It might become necessary in the future to direct some of the surplus foreign currency in the hand of oil-producing countries towards helping developing nations, perhaps through an international fund.
International cooperation The main energy consuming countries need to establish mutual understanding and ways of cooperating and to coordinate their policies. But these objectives will be difficult to achieve, since the requirements and interests of one nation differ from those of another, and because of past differences between certain countries. Following its policy of making security of supply its priority, the USA will pay more attention to the exploitation of its own resources. It will consider creating a league of importing countries to keep in check the growing power of OPEC, while trying to 102
ENERGY POLICY September 1973
World energy problems and Japan's international role
retain the dominance of major Western oil companies in the energy industry. The USA will also consider exerting larger influences on major oil-rich countries including Iran and Saudi Arabia. The UK too, will safeguard the interest of major oil firms and make an all-out effort to tap resources in the North Sea. France, Italy and West Germany will step up their efforts to forge closer relations with oil-producing countries on the strength of their respective positions. Japan will take a stand similar to that of these three countries. The political postures and external policies of oil-producing countries will remain as varied as those of importing countries. Some of the countries follow highly aggressive policies. The size of oil reserves in the various producing countries also differ widely, and they each maintain differing attitudes towards communist countries, which are now seen to be pushing through independent policies for oil. A common factor among oil-producing countries is their desire to promote socio-economic developments in their respective countries with the revenue from exporting oil and with the aid of industrialised nations, but, all of these countries, because of their past experiences as colonies, have deep-rooted suspicions of the industrially-advanced nations. Under these circumstances, importing nations will be required not only to develop an understanding between themselves but also with producing countries. Oil-importing nations have already discussed their problems at energy and oil committees of the OECD. Leading western oil companies were involved, whenever it seemed necessary, in dealing with oil-producing states. I believe that there is no need to create an organisation of oil-importing countries separate from what is already being done at OECD. Rather, it is more important to set down more clearly the objectives of future discussion at OECD and even to expand the scope of such talks. First of all, it must be made clear that the importing nations, in holding talks at the OECD, are not taking a stand similar to a sort of consuming-nation league aiming to repress the demands of OPEC. The discussion should be aimed at: • Establishing a perspective of the worldwide supply and demand situation of oil and avoiding oil war among importer states. • Establishing an international system of cooperation in time of temporary oil shortage. • Providing oil-producing countries with economic aid. • Studying measures for the development of new energy supply sources.
• Studying problems of procuring funds for energy production. • Developing technology and systems for efficient energy use. Some doubt if the government-to-government talks between producing and consuming nations produce any fruitful results. One should not expect an immediate solution of the problems in such talks, but through negotiations and consultation, the countries will come to understand each other better. If an international conference is not possible on a government level in
ENERGY POLICY September 1973
103
World energy problems and Japan's international role Table 1. Japan's energy demand and percentage distribution by sector - actual 1960-1970; projections 1975-1985
Total demand ( 10 ] 3 kcal) 5-year average growth (%) 4 Per capita consumption (10 kcal)
1960 84 10.5 903
1965 146 11.6 1483
1970 284 14.3 2739
1975 433 8.8 3939
1980 624 7.6 5381
1985 847 6.3 7012
2-5 54-8 15.6 39.2 6-8 14.8 17.7 6.6 11-1 3.5
2.3 51.2 15.6 35.6 6.4 14.3 18.7 8-4 10.4 7.0
2.3 49.3 18.1 31.2 6.9 13.0 17.9 9.3 8.6 10.8
1.8 48.7 14.6 34-0 8-0 13.4 18.8 9-9 8.9 9-5
1.6 46.5 12.5 34-0 8.0 13.9 20.3 10.6 9.7 9.7
1.4 43.3 11.3 32.0 8.0 14-7 22.3 11.4 10.9 10.4
1970 (actual)
1975
1980
1985
320
510
737
966
32 43 4 28 20 198 63 99 36 15 10 11
40 59 7 46 27 262 65 142 55 25 14 16
47 85 10 73 35 310 54 178 78 40 18 21
Percentage distribution by major industrial sectors (%) Agriculture and fishing Mining and manufacturing Iron and steel Other Energy sector Transportation Non-industry Commercial Residential Non-energy use (1 kcal ~ 4 . 2 kJ ~'~4.2 Btu)
Table 2. Forecast of energy demand (by quantity)
Electricity
(10 9 kWh)
Petroleum Gasoline Naphtha Jet fuel Kerosene Diesel oil Fuel oil (For generating) (For industries) (Others) LPG Other Refinery gas
(109 lit.)
(1013 kcal) (1013 kcal) (1013 kcal)
21 28 1 16 12 121 42 55 24 8 6 7
Coke
(106 tons)
43
48
58
67
Town gas
(1013 kcal)
5
8
12
18
Natural gas
(109 m 3)
2
2
2
2
L NG
(106 tons)
1
6
18
30
Others
(1013 kcal)
20
20
27
36
Table 3. Japan's primary energy supply forecast
Electricity Hydro. Nuclear Coal Domestic Import Petroleum (For generating) Natural gas L NG Total
104
(109 kWh) (109 kWh) (109 kWh) (106 kWh) (106 tons) (106 tons) (crude oil equivalent, 109 litres) (109 m 3) (106 tons) (10 ]3 kcal)
1965 1970 (actual)
1975
1980
1985
77 77 73 55 18 102
85 80 5 92 41 51 234
157 95 62 83 20 63 379
314 104 210 97 20 77 524
' 530 136 394 110 20 90 671
11.3 11.3 27-3 19.1 8.2 58.4
6.7 6-3 0.4 20.7 8.1 12-6 70.8
8.3 5.0 3.3 13-3 2.9 10.4 76.3
11.5 3.8 7.7 10-9 2.0 8.9 73.7
14.7 3-8 10.9 9.3 1-5 7.8 71-3
(14) 2 166
(44) 2 1 310
(66) 2 6 467
(69) 2 18 668
(57) 2 30 885
(7.5) 1-2
(13.2) 0.9 0-4 100.0
(13.3) 0.4 1.7 100.0
(9.7) 0.3 3.6 100.0
(6.1) 0.2 4.5 100.0
1965
Supply sharesofprimaryenergy (%) 1970 1975 1980 1985
100-0
ENERGY POLICY September 1973
World energy problems and Japan's international role
the immediate future, we could start with forums in which scholars, researchers and experts can exchange frank opinions. Producing and consuming nations should discuss: (1) The supply and demand situation of the world's energy sources centring on petroleum. (2) Adjustments between the resources conserving policies of producing nations and oil needs in consuming countries. (3) Ideas about the proper level of costs. (4) Development of joint ventures in the oil industry and related industrial branches. (5) Economic and technological cooperation. (6) Establishment of an international fund. The fund can be set up with the money normally spent by member nations of the OECD in their aid to developing countries and surplus currency reserves of oil-producing countries. The fund is used to promote the items (4) and (5). In holding international talks, each country should ponder how the oil problems might affect developing nations with no oil resources. Ways must be found for solving the oil problems and promoting the economic progress of such oil-deficient developing nations at the same time rather than hindering their progress.
Japan's role Prior to the establishment of schemes of international cooperation, I suggest that a global and long-range energy programme should be drawn up. This global programme should be based on the long-range energy plans of the three largest consuming regions of the non-communist world. Japan should call on neighbouring countries to draw up such a plan for the Asia-Pacific region. In this region, reserves of oil and natural gas are being exploited in Indonesia and Oceania. Australia is a potentially large supplier of coal. Exploration for offshore oil fields is certain in the future around Burma, Thailand, Vietnam and Japan. Supplies of oil, natural gas and coal to the region from the Soviet Union and China will also help. But most of the oil required in the Asia-Pacific region, certainly in the near future, will be from the Middle East, thus giving rise to the possibility of competition for supplies between Japan, Western Europe and America. Japan should also consider setting-up package deals with oil-producing nations. With its advanced industry and its huge market, Japan should be able to promote development of oil wells in oil-rich countries, to purchase of participation oil directly and to set-up joint ventures in related industrial sectors. In the package deal, Japan could offer capital goods and technology for industrialisation and assist in the development of markets, in social development projects and in other spheres. This would help to secure supplies of oil to the whole Asia-Pacific region. For Japan, such package deals would help to further bilateral relations and mutual understanding with producing countries. When this is achieved, Japan's voice should carry more weight in international meetings. The package deal should be promoted, not only through the ENERGY POLICY September 1973
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World energy problems and Japan's international role
participation of western oil firms and the nationalised firms of developing countries, but also by consultation with the government of consuming nations. We must act now to create a new kind of international petroleum industry geared to producing nations historical evolution toward economic progress and social modernisation. Japan must reorganise its own petroleum industry in order to fulfil its international role. At present, it consists of a multitude of small-sized petroleum development firms and refining companies. A number of business groups comprising banks and trading houses have been formed recently for petroleum exploitation. Banks and trading houses have demonstrated, through their participation in the development of the heavy and chemical industries, their outstanding ability to secure necessary funds, organise work and develop markets. The package deals with producing countries would be greatly enhanced if and when oil refinering and development firms join forces with these new business groups. At the same time, the Japanese oil industry will have to set-up agreements with international oil firms to broaden their spheres of activities outside of Japan. In so doing, they will be able to contribute more to the securing of a steady supply of petroleum. The developing world situation over petroleum dictates that the Japanese oil industry must introduce international profits into its activities. From this standpoint, the Japanese Government should basically review its petroleum policy and make itself flexible to change. Japan should play its part in tapping new sources of energy and in improving the efficiency of energy use. It should make more efforts in the areas of technological development and international cooperation for advancing the huge projects for exploiting oil in polar regions and in deep sea as well as developing fast-breeder reactors and investigating other sources, such as nuclear fusion, solar energy and geothermal energy. The industrially advanced nations are obliged to rescue mankind from the energy crisis by finding efficient uses of energy, if only because they built-up their economic power and attained their high living standards through massive consumption of cheap energy. These countries are now required to strive harder to develop high-efficiency power plants, industrial equipment and household appliances that consume less power, and better heat insulation. Regional systems of supplying energy must be established, mass transport systems must be developed further and cities must be redeveloped to conserve energy. Our habit of squandering energy must end. Japan, a country which is deficient in energy resources, should be working particularly hard to find more efficient uses of energy. It must speed up its research in this sphere, as the main way to alleviate the present world problem.
106
ENERGY POLICY September 1973
Security of oil supplies The present 'energy crisis' in North America, Japan and Western Europe is basically a matter of whether or not additional oil reserves can be found in sufficient quantities. But even if enough new deposits were found it would not be the end of the crisis. There would still be a continuing need for reliable, secure supplies o f oil, and these supplies are being threatened by a number of interconnected developments.
Participation Great changes are taking place in the oil-supply mechanism. The governments o f the oil-producing countries have turned from being mere collectors of tax from the oil industry to assuming the position of control. Oil-producing nations, urged on by growing nationalism, are strengthening their hold over the oil industry through nationalisation of the industry on their soil, participation in oil business, and conservation of resources. The unstable political situation in producing countries and the tendency to use oil as a means to achieve political or economic goals must remain a cause for concern in the consuming countries. The influence of the international oil companies will be weakened by these changes and their ability to respond to the international supply-demand situation will gradually lessen. These oil companies are becoming less and less able to guarantee long-term oil supplies. Consuming nations which have relied on the major oil firms for supply are n o w facing an increasingly uncertain future.
US oil imports and competition for supplies US imports o f oil which are expected to continue to grow over
a long period of time will have a tremendous impact on the world market. The expected sharp increase in these i m p o r t s - mainly from Africa and the Middle East - over the next few years will result in a strained supply-demand situation and may make it difficult for other countries to buy petroleum in the long term. These other consuming countries are haunted by fears that the USA, using its influence through the Government and major oil firms over Iran and Saudi Arabia, may out-manoeuvre them in securing supplies of oil. This fear is intensified by the current preoccupation of Washington with the security of its energy supplies. 100
E N E R G Y P O L I C Y September 1973
World energy problems and Japan's international role
Fear of American competition for supplies is liable to drive oil-consuming countries to approach producing nations on their own. Under such circumstances, consuming nations are closely watching what new policy the USA may adopt on development of domestic resources and what diplomatic approaches it will take for securing other energy resources. In the. future, international friction could occur over the supply of oil. On the one hand, consumer nations will continue to depend for the purchase of oil on the major Western oil firms which have worldwide supply sources. On the other hand, however, there is a possibility that an intense race will develop among consumer nations for the crude oil that producing countries can offer. Western Europe and Japan are likely to approach producing countries for direct purchase of crude oil offering package deals for the development of oil fields, and joint ventures and Government-backed economic and technological cooperation to support their offers. And the USA will find it in its interest to maintain as much as possible the influence of its major oil companies over the oil market and at the same time will work to improve its diplomatic relations with Arab countries. Especially, it will continue its economic and military assistance to Saudi Arabia and Iran, the two major oil-supplying nations, and depending on developments, may offer package deals to particular oil-producing countries. The Soviet Union is likely to try to strengthen its political influence over Africa and the Middle East to improve its bargaining position with the USA. Such competition among oil-consuming countries and the Soviet Union in relation to the oil-producing nations could not only lead to oil prices rising above a reasonable level but could also cause political commotions within, and frictions among, producing countries, thus making supplies uncertain. Also, after the termination of the Teheran Agreement in 1975, the price of oil may rise sharply. This would create a major problem for industrialised countries, but the effect on developing nations which have no oil resources would be even worse.
International monetary problems The rising price of crude oil, increasing imports of oil by consuming nations, and participation in and nationalisation of the oil industry by producing countries, all bring about a major change in the international monetary flow and balance of payments of world countries. Eleven members of the Organisation of Petroleum Exporting Countries (OPEC) will have about $50 000 million revenue from crude oil if they produce sufficient to meet the demands of consuming countries over the next 10 years. The bulk of these vast earnings will be spent for economic and social development in these oil-producing countries and for import of capital and consumer goods from industrialised countries. But there is a possibility that a substantial foreign currency surplus will be piled up in some Persian Gulf countries. For instance, Saudi Arabia will have about $150 000 million revenue in the 10 years up to 1985 according to our estimate. Even if one half of the
ENERGY POLICY September 1973
101
World energy problems and Japan's international role
revenue were spent on domestic development (this is 80% larger than the estimate made by Prince Saud), there remains about $70 million foreign currency surplus. This estimate is based on the assumption that Saudi Arabia will continue increasing its oil production until it reaches 29 million barrels per day by 1980 and that the production volume will then level off. However, if such a big foreign reserve surplus actually comes about, Saudi Arabia may change its policy and go for conservation. Oil-producing countries are most likely to adopt a policy of deciding the oil production programme by weighing their need for funds for economic and social development against the growing value of remaining reserves of oil. To satisfy the growing demand for oil in consuming countries, a sharp increase in oil production in the Middle East, and especially in Saudi Arabia is a prerequisite. Realising this, industrialised nations should offer aid to producing countries. At the same time, it will be necessary, as called for by Sheik Yamani, the oil minister of Saudi Arabia, to help the oil-producing countries find profitable fields of investment, such as the overseas oil industry, so that they could best use their surplus foreign currency reserves. The utilisation of the huge foreign currency reserves that will accumulate in producing countries is a venture, not only in the interests of consuming countries for securing their oil needs. It will be a key issue in correcting the present imbalance in economic welfare between industrialised and non-industrialised nations, as well as for maintaining equilibrium in the international monetary system. The present international picture - industrialised countries enjoying trade surplus, developing countries suffering trade deficits and balancing the two by economic aids from the former to the l a t t e r - w i l l change to a new relationship under which industrialised nations (especially the USA) would either suffer a trade deficit or lose much of its surplus because of increased oil imports. Under this system, developing nations, which are not oil producers, would further increase their deficits and oil-producing countries would accumulate a huge surplus. In view of this, can OECD nations fulfil their obligation of giving 1% of their GNP to the aid of developing countries pledged by the Development Assistance Committee? It might become necessary in the future to direct some of the surplus foreign currency in the hand of oil-producing countries towards helping developing nations, perhaps through an international fund.
International cooperation The main energy consuming countries need to establish mutual understanding and ways of cooperating and to coordinate their policies. But these objectives will be difficult to achieve, since the requirements and interests of one nation differ from those of another, and because of past differences between certain countries. Following its policy of making security of supply its priority, the USA will pay more attention to the exploitation of its own resources. It will consider creating a league of importing countries to keep in check the growing power of OPEC, while trying to 102
ENERGY POLICY September 1973
World energy problems and Japan's international role
retain the dominance of major Western oil companies in the energy industry. The USA will also consider exerting larger influences on major oil-rich countries including Iran and Saudi Arabia. The UK too, will safeguard the interest of major oil firms and make an all-out effort to tap resources in the North Sea. France, Italy and West Germany will step up their efforts to forge closer relations with oil-producing countries on the strength of their respective positions. Japan will take a stand similar to that of these three countries. The political postures and external policies of oil-producing countries will remain as varied as those of importing countries. Some of the countries follow highly aggressive policies. The size of oil reserves in the various producing countries also differ widely, and they each maintain differing attitudes towards communist countries, which are now seen to be pushing through independent policies for oil. A common factor among oil-producing countries is their desire to promote socio-economic developments in their respective countries with the revenue from exporting oil and with the aid of industrialised nations, but, all of these countries, because of their past experiences as colonies, have deep-rooted suspicions of the industrially-advanced nations. Under these circumstances, importing nations will be required not only to develop an understanding between themselves but also with producing countries. Oil-importing nations have already discussed their problems at energy and oil committees of the OECD. Leading western oil companies were involved, whenever it seemed necessary, in dealing with oil-producing states. I believe that there is no need to create an organisation of oil-importing countries separate from what is already being done at OECD. Rather, it is more important to set down more clearly the objectives of future discussion at OECD and even to expand the scope of such talks. First of all, it must be made clear that the importing nations, in holding talks at the OECD, are not taking a stand similar to a sort of consuming-nation league aiming to repress the demands of OPEC. The discussion should be aimed at: • Establishing a perspective of the worldwide supply and demand situation of oil and avoiding oil war among importer states. • Establishing an international system of cooperation in time of temporary oil shortage. • Providing oil-producing countries with economic aid. • Studying measures for the development of new energy supply sources.
• Studying problems of procuring funds for energy production. • Developing technology and systems for efficient energy use. Some doubt if the government-to-government talks between producing and consuming nations produce any fruitful results. One should not expect an immediate solution of the problems in such talks, but through negotiations and consultation, the countries will come to understand each other better. If an international conference is not possible on a government level in
ENERGY POLICY September 1973
103
World energy problems and Japan's international role Table 1. Japan's energy demand and percentage distribution by sector - actual 1960-1970; projections 1975-1985
Total demand ( 10 ] 3 kcal) 5-year average growth (%) 4 Per capita consumption (10 kcal)
1960 84 10.5 903
1965 146 11.6 1483
1970 284 14.3 2739
1975 433 8.8 3939
1980 624 7.6 5381
1985 847 6.3 7012
2-5 54-8 15.6 39.2 6-8 14.8 17.7 6.6 11-1 3.5
2.3 51.2 15.6 35.6 6.4 14.3 18.7 8-4 10.4 7.0
2.3 49.3 18.1 31.2 6.9 13.0 17.9 9.3 8.6 10.8
1.8 48.7 14.6 34-0 8-0 13.4 18.8 9-9 8.9 9-5
1.6 46.5 12.5 34-0 8.0 13.9 20.3 10.6 9.7 9.7
1.4 43.3 11.3 32.0 8.0 14-7 22.3 11.4 10.9 10.4
1970 (actual)
1975
1980
1985
320
510
737
966
32 43 4 28 20 198 63 99 36 15 10 11
40 59 7 46 27 262 65 142 55 25 14 16
47 85 10 73 35 310 54 178 78 40 18 21
Percentage distribution by major industrial sectors (%) Agriculture and fishing Mining and manufacturing Iron and steel Other Energy sector Transportation Non-industry Commercial Residential Non-energy use (1 kcal ~ 4 . 2 kJ ~'~4.2 Btu)
Table 2. Forecast of energy demand (by quantity)
Electricity
(10 9 kWh)
Petroleum Gasoline Naphtha Jet fuel Kerosene Diesel oil Fuel oil (For generating) (For industries) (Others) LPG Other Refinery gas
(109 lit.)
(1013 kcal) (1013 kcal) (1013 kcal)
21 28 1 16 12 121 42 55 24 8 6 7
Coke
(106 tons)
43
48
58
67
Town gas
(1013 kcal)
5
8
12
18
Natural gas
(109 m 3)
2
2
2
2
L NG
(106 tons)
1
6
18
30
Others
(1013 kcal)
20
20
27
36
Table 3. Japan's primary energy supply forecast
Electricity Hydro. Nuclear Coal Domestic Import Petroleum (For generating) Natural gas L NG Total
104
(109 kWh) (109 kWh) (109 kWh) (106 kWh) (106 tons) (106 tons) (crude oil equivalent, 109 litres) (109 m 3) (106 tons) (10 ]3 kcal)
1965 1970 (actual)
1975
1980
1985
77 77 73 55 18 102
85 80 5 92 41 51 234
157 95 62 83 20 63 379
314 104 210 97 20 77 524
' 530 136 394 110 20 90 671
11.3 11.3 27-3 19.1 8.2 58.4
6.7 6-3 0.4 20.7 8.1 12-6 70.8
8.3 5.0 3.3 13-3 2.9 10.4 76.3
11.5 3.8 7.7 10-9 2.0 8.9 73.7
14.7 3-8 10.9 9.3 1-5 7.8 71-3
(14) 2 166
(44) 2 1 310
(66) 2 6 467
(69) 2 18 668
(57) 2 30 885
(7.5) 1-2
(13.2) 0.9 0-4 100.0
(13.3) 0.4 1.7 100.0
(9.7) 0.3 3.6 100.0
(6.1) 0.2 4.5 100.0
1965
Supply sharesofprimaryenergy (%) 1970 1975 1980 1985
100-0
ENERGY POLICY September 1973
World energy problems and Japan's international role
the immediate future, we could start with forums in which scholars, researchers and experts can exchange frank opinions. Producing and consuming nations should discuss: (1) The supply and demand situation of the world's energy sources centring on petroleum. (2) Adjustments between the resources conserving policies of producing nations and oil needs in consuming countries. (3) Ideas about the proper level of costs. (4) Development of joint ventures in the oil industry and related industrial branches. (5) Economic and technological cooperation. (6) Establishment of an international fund. The fund can be set up with the money normally spent by member nations of the OECD in their aid to developing countries and surplus currency reserves of oil-producing countries. The fund is used to promote the items (4) and (5). In holding international talks, each country should ponder how the oil problems might affect developing nations with no oil resources. Ways must be found for solving the oil problems and promoting the economic progress of such oil-deficient developing nations at the same time rather than hindering their progress.
Japan's role Prior to the establishment of schemes of international cooperation, I suggest that a global and long-range energy programme should be drawn up. This global programme should be based on the long-range energy plans of the three largest consuming regions of the non-communist world. Japan should call on neighbouring countries to draw up such a plan for the Asia-Pacific region. In this region, reserves of oil and natural gas are being exploited in Indonesia and Oceania. Australia is a potentially large supplier of coal. Exploration for offshore oil fields is certain in the future around Burma, Thailand, Vietnam and Japan. Supplies of oil, natural gas and coal to the region from the Soviet Union and China will also help. But most of the oil required in the Asia-Pacific region, certainly in the near future, will be from the Middle East, thus giving rise to the possibility of competition for supplies between Japan, Western Europe and America. Japan should also consider setting-up package deals with oil-producing nations. With its advanced industry and its huge market, Japan should be able to promote development of oil wells in oil-rich countries, to purchase of participation oil directly and to set-up joint ventures in related industrial sectors. In the package deal, Japan could offer capital goods and technology for industrialisation and assist in the development of markets, in social development projects and in other spheres. This would help to secure supplies of oil to the whole Asia-Pacific region. For Japan, such package deals would help to further bilateral relations and mutual understanding with producing countries. When this is achieved, Japan's voice should carry more weight in international meetings. The package deal should be promoted, not only through the ENERGY POLICY September 1973
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participation of western oil firms and the nationalised firms of developing countries, but also by consultation with the government of consuming nations. We must act now to create a new kind of international petroleum industry geared to producing nations historical evolution toward economic progress and social modernisation. Japan must reorganise its own petroleum industry in order to fulfil its international role. At present, it consists of a multitude of small-sized petroleum development firms and refining companies. A number of business groups comprising banks and trading houses have been formed recently for petroleum exploitation. Banks and trading houses have demonstrated, through their participation in the development of the heavy and chemical industries, their outstanding ability to secure necessary funds, organise work and develop markets. The package deals with producing countries would be greatly enhanced if and when oil refinering and development firms join forces with these new business groups. At the same time, the Japanese oil industry will have to set-up agreements with international oil firms to broaden their spheres of activities outside of Japan. In so doing, they will be able to contribute more to the securing of a steady supply of petroleum. The developing world situation over petroleum dictates that the Japanese oil industry must introduce international profits into its activities. From this standpoint, the Japanese Government should basically review its petroleum policy and make itself flexible to change. Japan should play its part in tapping new sources of energy and in improving the efficiency of energy use. It should make more efforts in the areas of technological development and international cooperation for advancing the huge projects for exploiting oil in polar regions and in deep sea as well as developing fast-breeder reactors and investigating other sources, such as nuclear fusion, solar energy and geothermal energy. The industrially advanced nations are obliged to rescue mankind from the energy crisis by finding efficient uses of energy, if only because they built-up their economic power and attained their high living standards through massive consumption of cheap energy. These countries are now required to strive harder to develop high-efficiency power plants, industrial equipment and household appliances that consume less power, and better heat insulation. Regional systems of supplying energy must be established, mass transport systems must be developed further and cities must be redeveloped to conserve energy. Our habit of squandering energy must end. Japan, a country which is deficient in energy resources, should be working particularly hard to find more efficient uses of energy. It must speed up its research in this sphere, as the main way to alleviate the present world problem.
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