“Asia will be a huge market and this will be a big take off,” Nuaimi told reporters ahead of an Opec meeting.
About half of the Kingdom’s crude exports come to Asia, a share that is set to rise next year. Chinese state oil firms have agreed to raise 2010 crude imports from Saudi Arabia by about 12 percent from this year to top one million barrels a day, traders have said, making the world’s No.2 oil user an important client.
“Japan is not that far away from China and with all this excess capacity, that may be the reason they’re looking to store crude here,” said Tony Nunan, risk manager with Tokyo-based Mitsubishi Corp.
Oil demand has been steadily falling in Japan for years, a trend that accelerated this year in the face of the country’s worst recession in decades, leaving the country with one million barrels per day of excess refining capacity, according to some analysts.
Naimi said state oil company Saudi Aramco had been offered the commercial storage for no charge. When asked for details of how the deal had been agreed, Naimi said: “Through good negotiations.” The deal follows a similar move by Abu Dhabi National Oil Co (Adnoc).
The United Arab Emirates firm signed a final agreement with Japan’s biggest oil refiner Nippon Oil Corp earlier this month to store crude oil to help stock up Japan’s national reserves.
Both of the deals also come as Russia looks to ramp up exports of ESPO Blend crude oil in January from its new Pacific terminal of Kozmino, a new grade that looks to go head to head with Saudi Arabia’s Arab Light grade in Asia.
“Since there will be a large flow of Russian short haul oil, maybe to compete with that they think they need to have crude in storage close to the Asian markets,” Nunan added.