(EnergyAsia, October 11 2016, Tuesday) — Saudi Arabia’s state-owned oil giant Aramco will increase the amount of crude oil it currently stores on Japan’s Okinawa Island from 6.3 million barrels to around 8.3 million barrels from next year.
The new three-year agreement with Japan Oil, Gas and Metals National Corporation (JOGMEC) will enhance energy security for both countries as part of their push for expanded bilateral ties. Japan will have first call on the stored oil in the event of any supply disruption while Saudi Arabia will boost its crude stockpile outside of the volatile Middle East to supply its customers in Asia.
The expanded deal was announced during the visit to Japan by Deputy Crown Prince Mohammed bin Salman who led a high-level Saudi delegation that included Energy Minister Khalid al-Falih, other ministers, and Saudi Aramco CEO Amin Nasser. Price Salman met Japanese Prime Minister Shinzo Abe and Emperor Akihito during his four-day trip.
Japan initiated the unique crude oil storage agreement in 2010 when it offered Saud Arabia free stockpiling services in exchange for security of supply. At that time, Brent crude was trading at more than US$100 a barrel amid fears over the stability of global supply.
As part of its 2030 vision to reduce dependency on oil, Saudi Arabia is looking to enlist Japan’s help to develop the other sectors of its economy. Aramco would consider listing its shares on the Tokyo Stock Exchange, Mr Nasser told the Nikkei newspaper.
In a separate but similar deal, state-owned Abu Dhabi National Oil Co (ADNOC) has also agreed with JOGMEC to expand its stockpile of crude on Okinawa by two million barrels to around 8.3 million barrels.