State-run Japan Oil, Gas and Metals National Corp (JOGMEC) signed a contract with the world’s top exporter Saudi Aramco to extend a crude oil storage deal on the island of Okinawa by three years, Reuters reported.
According to the terms of the agreement, Saudi Aramco can store up to 6.3m barrels of crude oil on the island southwest of mainland Japan until 2019. Japan and Aramco had earlier been discussing expanding the Okinawa crude storage by about 2m barrels. Yet, the volumes have not changed from the previous three-year deal, which will expire in December, informed The Star Online.
The volumes could still rise during the new three-year contract, depending on the Japanese government’s budget and the availability of tank space. In return for providing free storage space to 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. Furthermore, Japan has a similar storage deal with Abu Dhabi National Oil Co. under which the Middle Eastern oil company can store the same volume of crude at the Okinawa facilities. These crude stocks are treated as quasi-government inventory, counting half of the barrels as part of Japan’s strategic crude reserves.