Japan and Saudi Arabia have agreed in principle to renew a joint crude oil storage scheme in Okinawa when it expires in October, a move that gives the Middle East supplier quick and easy access to its key customers in East Asia, while providing energy security for Tokyo amid mounting geopolitical woes, Hellenic Shipping News reported.
It was one of the areas of cooperation in the updated Saudi-Japan Vision 2030 2.0 agreement signed at a ministerial meeting on Wednesday in Tokyo.
“It is significant to renew the joint crude oil storage project,” Minister of Economy, Trade and Industry Isshu Sugawara said at the start of the fourth Saudi-Japan 2030 Vision Ministerial Meeting in Tokyo. “Our country will continue to support Saudi Arabia’s stable oil supply through this project henceforward.”
The current agreement with Saudi Aramco under a scheme known as the “Joint Crude Storage by Producing Countries,” and where Tokyo pays for storing Saudi Arabian oil at leased storage tanks in Okinawa, is due to expire in October.
Following this, Japan and Saudi Arabia will accelerate their talks for renewal of the scheme, which will continue to generate for both countries, sources at the Ministry of Economy, Trade and Industry said.
Under the current agreement, Saudi Aramco leases 1.30 million kiloliters or 8.18 million barrels of crude oil storage capacity at Okinawa for commercial purposes in exchange for prioritizing supply to Japan in the event of an emergency.
For Japan, storing oil domestically from its strategic suppliers such as Saudi Arabia has become more important after a series of events this year which occurred in the Middle East, where Japan relies on close to 90% of its crude import requirements.
Crude imports from Saudi Arabia average 1.09 million b/d and account for roughly 35% of total oil imports over January-August, when the kingdom was still the largest supplier for Japan, although its imports for the first eight months of this year fell 5.8% from a year ago.
Tokyo became nervous after the September 14 attacks on Saudi Arabian oil facilities, which occurred after two ships, including one operated by a Japanese shipping company, were attacked on June 13 just outside of the Strait of Hormuz. The waterway, a key route for oil tankers in the Persian Gulf, is used for around 80% of Japan’s crude imports.