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[Zephyr]

13:31:32 Japan's Private-Sector Oil Stockpiles Set For Release -Nikkei


TOKYO (Nikkei)--The government plans to lower the required level for legally
mandated private-sector oil reserves amid uncertainty in supplies of gasoline
and other fuels, The Nikkei reported early Tuesday.

As eastern Japan staggers back from Friday's devastating earthquake, the
government will also ask big manufacturers and other large-lot electricity
users to conserve more power so that Tokyo Electric Power Co. (9501.TO) can
scale back its rolling blackouts.

Minister of Economy, Trade and Industry Banri Kaieda said Monday night that
oil wholesalers and other private-sector dealers will be able to reduce their
required oil stockpiles from a 70-day supply to a 67-day supply. The reduction
is the equivalent of 1.26 million kiloliters. The lower requirement will be
maintained for a month, with 3,000 drums to be readied to get the oil to where
it is needed.

It will mark the fifth time Japan has released oil from its reserves. The
last time was in September 2005 as part of an international response to
Hurricane Katrina in the U.S.

Concerns of shortages of gasoline, kerosene and other fuels have emerged, in
part because refineries have been shut down. Fuel oil is also in greater demand
for generating power.

The Ministry of Economy, Trade and Industry informed trading companies and
other oil importers that it is considering allowing them to let their oil
reserves fall below the legally mandated limit.

The government will take additional steps to stem the disruption spreading
through areas not directly damaged by the disaster. Tepco's planned blackouts
will have a major impact, not the least of which will be train service
stoppages in the Tokyo area.

With the government poised to ask the biggest electricity users to cut back,
a number of firms are already suspending or reducing production. JFE Holdings
Inc.'s (5411.TO) JFE Steel Corp. halted nearly all output Monday at mills in
Kawasaki and Chiba. Nippon Steel Corp. (5401.TO) shut down its steel plant in
Tokyo's Itabashi Ward for three hours.

Sony Corp. (SNE) temporarily closed three R&D centers, while Toshiba Corp.
(TOSYY) put production on hold at an elevator factory in Fuchu outside of
central Tokyo and a plant that makes communication and broadcasting equipment
in Kawasaki.

The government sees the cost of rebuilding from the disaster adding up to a
record-high figure, even more than the roughly Y3 trillion budgeted for the
recovery from the 1995 Great Hanshin Earthquake.

A senior policymaker in the ruling Democratic Party of Japan predicted "no
less than Y10 trillion" in supplementary-budget spending on the recovery. The
Ministry of Finance plans to cope by cutting spending in next fiscal year's
budget while issuing more bonds and raising some taxes.

For now, the government is considering mobilizing nearly all of the Y203.8
billion in remaining fiscal 2010 contingency funds. The cabinet approved an
appropriation of Y30.2 billion of this amount Monday for food and other
emergency supplies.


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03-14-11 1331ET

13:31 031411