Diversification and Energy Security Risks: The Japanese Case

Abstract

This article explores the relationship between diversification and energy security risks. It uses portfolio theory to conceptualise energy security as an insurance mechanism against disruptions to energy import markets. It provides quantitative measures of systematic and specific risks associated with Japanese energy imports during the period 1970—99. It suggests that Japan's policy of diversification of energy import sources has reduced specific risks, although fundamental changes in the political and economic structure of international energy and, in particular, oil markets have also significantly reduced systematic risks. The article concludes that, despite their limitations, portfolio measures provide a much more theoretically and methodologically robust indicator of energy import security than traditional measures of dependence.

European Union Oil Import Dependency Risk Analysis

“…One of the potential remedies to the problem could be implementation of practices similar to the ones implemented by other countries highly dependant on oil, such as China, Japan, and the USA. These countries have implemented oil import diversification strategies that have reduced the risk of potential oil shortages [42][43][44].…”

Chinese foreign direct investment in Australia: policy issues for the resource sector1

“…An important objective is to assuage nascent Chinese corporate and policy strategies aimed at containing the growth of Australian market share. These strategies are familiar instruments in the pursuit of minerals and energy security by resource importers (Lesbirel, 2004). There is the added risk that application of 'additional' policy tests with respect to Chinese investment creates uncertainty and impediments to investment from other sources as well.…”

China's New Place in a World in Crisis : Economic, Geopolitical and Environmental Dimensions

“…An important objective is to assuage nascent Chinese corporate and policy strategies aimed at containing the growth of Australian market share. These strategies are familiar instruments in the pursuit of minerals and energy security by resource importers (Lesbirel 2004). There is the added risk that application of 'additional' policy tests with respect to Chinese investment creates uncertainty about and impediments to investment from other sources as well.…”