Japan extends crude storage deal with Saudi Aramco

Japan's state-owned energy agency Jogmec has extended its contract to lease oil storage capacity in Okinawa to state-owned Saudi Aramco for another three years.

The contract was initially signed in December 2010 for three years and has regularly been renewed by Aramco for consecutive three-year periods. The capacity covered by the deal has been increased from the original 600,000 kl (3.77mn bl) to 1.3mn kl (8.18mn bl) as part of those renewals.

Jogmec borrows capacity from the owners of the Okinawa storage terminal, Japanese refiners JXTG and Cosmo Oil, and then leases it out to Aramco. Jogmec does not charge Aramco for the lease, but the deal includes a provision for Aramco to prioritise supplies to Japan during an emergency.

Aramco uses the tanks to store its own crude, including Arab Light, Arab Extra Light, Arab Medium and Arab Heavy, in order to optimise its commercial supplies to Asian customers, market participants said.

Japan has had a similar contract with Abu Dhabi's state-owned Adnoc since December 2009 to lease 1mn kl (6.29mn bl) of tank capacity in Kagoshima prefecture. The leased storage tank is owned by JXTG, and Jogmec pays the fee for Adnoc. Adnoc's crude stocks are also designed to increase Japan's energy security during any potential emergencies.

By Maiko Nakashima