Saudi Aramco and Japanese firm extend Okinawa crude storage deal

Japan’s Trade and Industry Minister Hiroshige Seko

TOKYO: Japan Oil, Gas and Metals National Corp. (JOGMEC) has signed a contract with Saudi Aramco to extend a crude oil storage deal on the island of Okinawa by three years.
Under the agreement, Saudi Aramco can store up to 1 million kiloliters (6.3 million barrels) of crude oil on the island southwest of mainland Japan for the next three years, JOGMEC said in a statement.
The volumes are unchanged from the previous three-year deal, which is expiring this month. Japan and Saudi Aramco had earlier been discussing expanding the Okinawa crude storage by about 2 million barrels.
The volumes could still rise during the three years of the new contract, depending on the Japanese government’s budget and the availability of tank space, a JOGMEC official said.
In return for providing free storage space to Saudi Aramco, Japan gets a priority claim on the oil stocks in an emergency.
Saudi Aramco has stored crude in Okinawa since February 2011, and has used the facility to supply oil to China, Japan and South Korea among others.
Japan has a similar storage deal with Abu Dhabi National Oil Co. (ADNOC) under which the oil company can store the same volume of crude at the facilities at Kiire in Kyushu, southwest Japan.
Japan treats the oil stored by Saudi Aramco and ADNOC as quasi-government inventory, counting half of the barrels as part of the national strategic crude reserves.
Officials in Tokyo said Japan has agreed to allow the Abu Dhabi firm to store crude oil in the country for two more years, giving the nation’s second-largest supplier continued access to a depot through 2019.
The agreement came during a recent meeting between Japan Trade Minister Hiroshige Seko and ADNOC chief executive Sultan Al-Jaber in the United Arab Emirates (UAE), Japan’s Ministry of Economy, Trade and Industry said in a statement.
Tokyo has given UAE free crude storage since 2009. The arrangement had been due to expire at the end of this year and was extended to the end of 2019, a trade ministry official said.
Under the deal, ADNOC can store up to 6.29 million barrels (1 million kiloliters) at Kiire oil terminal in Kagoshima, southern Japan at no cost.
The deals with Saudi Aramco and ADNOC provide the two biggest oil suppliers to Japan easy access to Asian markets while giving the country priority access to the reserves if it is in short supply.
The government counts half of the barrels stored by Saudi Aramco and ADNOC as part of the national strategic crude reserves.