Japan considering stockpiling naphtha again

The Japanese government is considering reviving naphtha stockpiling amid concerns over supply disruptions stemming from the Middle East tensions.

Naphtha was once subject to mandatory stockpiling like oil. This practice was scrapped in 1993 at the request of the petrochemical industry, which cited heavy costs.

Requests for the revival of naphtha stockpiling have come from various quarters, but there are problems such as how to store the highly volatile substance and who should bear the storage costs.

Naphtha is a raw material for plastic products and paints. Japan procures 40% of its naphtha through imports from the Middle East. Domestically produced naphtha also accounts for about 40%, but much of it is made from crude oil from the region.

The housing and construction industries have been hit by shortages of paints and solvents.

In response to the situation, industry minister Ryosei Akazawa announced on July 7 that the government would consider stockpiling naphtha.

However, naphtha, similar to gasoline in properties, is difficult to store for long periods because it evaporates easily. The industry ministry is considering storing it in pellet form and increasing the crude oil stockpiling to secure a portion that can be allocated to naphtha production.

“Japan needs to have (naphtha) reserves,” said Mitsubishi Chemical Group =President and CEO Manabu Chikumoto, chairman of the Japan Petrochemical Industry Association. He added that stockpiling in liquid form is “not very realistic.”

The issue of storage methods is related to who should bear the costs.

On this, a ministry official said that the government hopes to reach a decision “as soon as possible.” However, an oil company official said that the problem is not easy to solve because it involves multiple industries.