Saudi Arabia will store 3.8 million barrels of crude oil in Japan, helping the Pacific nation stock up its reserves while giving the top oil exporter better access to Asian markets.
The well-flagged deal between Japan's trade ministry and state oil firm Saudi Aramco would see the crude start arriving later this year at the Okinawa Oil Base (OCC), according to a trade ministry statement.
Industry sources have said the size of its facilities and the fact OCC allows supertankers to dock directly at port to transfer crude oil makes it a good destination for the Saudi crude.
Saudi Arabia and Japan have been discussing an agreement in which the kingdom would store crude oil in Okinawa since April 2007, when then-Japanese prime minister Shinzo Abe offered up the storage.
Late last year Saudi Arabia's Oil Minister Ali al-Naimi said the oil giant had accepted an offer to put "millions of barrels" of crude oil in storage on the Okinawa islands.
Full strategic petroleum reserves in not only Okinawa, but all across the archipelago, have delayed the project, industry sources have said, forcing Japan's government to offer up crude from storage on the spot market.
In a series of tenders this year Japan's trade ministry has sold about 3.9 million barrels of crude from its national stockpiles, and plans to offer up more.
The basic agreement follows a deal Japan inked with Abu Dhabi National Oil Co (ADNOC) last year to store crude in the country, as Middle East oil producers move to bolster their onshore crude storage capacity in Asia. (Reuters)