September 11, 2017 [Reuters] - Oil giant Saudi Aramco will on Wednesday add 1.9 million barrels (300,000 kilolitres) of crude to storage that it holds in Japan, a Japanese trade ministry official said on Monday.
The move comes as Japan from this month raises the crude storage capacity that it lends for free to the state-run Aramco by 30 percent to 8.2 million barrels, based on a previous agreement between the two nations.
The extra storage, which the Japanese government announced in July, will help Saudi Arabia, the world’s biggest oil exporter, as it battles to keep customers in northern Asia amid a global glut and relatively low prices. In return for providing free storage on the southern islands of Okinawa, Japan gets a priority claim on the stockpiles in case of an emergency.
Saudi Arabia currently holds a total of 6.3 million barrels (1 million kl) of crude in Japanese storage, the trade ministry official said, declining to be identified.
Aramco could not be immediately reached for comment. Japan is Saudi Arabia’s biggest market for crude, but oil stored at the site in Okinawa has also been supplied to South Korea and China among others. State-owned Saudi Aramco has stored crude in Okinawa since early 2011 at no cost.
The east Asian nation has a similar deal with Abu Dhabi National Oil Co (ADNOC), under which ADNOC can store up to 6.29 million barrels (1 million kilolitres) at Kiire oil terminal in southern Japan’s Kagoshima.
As Japan has a priority claim on the stockpiles, it treats the crude oil stored by Aramco and ADNOC as quasi-government oil reserves, counting half of the barrels as national crude reserves. Aramco and ADNOC need to fill at least half of the storage space at all times.
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