Saudi Aramco also signs deals with GE to expand gas-oil processing facilities at Shaybah oil fields
State-run Saudi Aramco will start storing crude oil in Japan from February onwards, helping the Pacific nation stock up its reserves while giving the top oil exporter better access to Asian markets.
State-run Japan Oil, Gas and Metals National Corp (JOGMEC) said it signed a contract with Saudi Aramco on Tuesday, allowing the top crude exporter to store about 600,000 kilolitres (3.8 million barrels) of crude in Okinawa, southwest Japan, for three years ending December 2013.
The first vessel carrying 1.9 million barrels of crude is scheduled to arrive in February or later.
The contract comes six months after the basic agreements between Japan's trade ministry and Saudi Aramco.
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 the storage.
The move 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.
Meanwhile, Saudi Aramco also signed deals with General Electric worth around $500m to expand gas-oil processing facilities at its Shaybah oilfield, the US company said on Tuesday.
After the expansion, the field's production capacity would rise to 1 million barrels per day (bpd) from 750,000 bpd now, GE said in an emailed statement.
The project would also enhance oil recovery at Shaybah, GE said.
GE said it would supply, in the first half of 2012, 11 gas turbine-generators, 44 compressors, motors and services to generate 729 megawatts (MW) of power.
Last year, Aramco completed a massive crude oil expansion programme that took its production capacity to 12 million bpd, boosting the kingdom's total production capacity to 12.5 million bpd.
The expansion included increasing capacity at Shaybah oilfield from 250,000 bpd. Shaybah pumps Arab extra light crude, liked by refiners as it is easier to refine than heavier crudes.
Ali al-Naimi, oil minister of the world's largest oil exporter was quoted as saying in June that Saudi Arabia was unlikely to need to boost its crude production capacity beyond 12.5 million bpd until 2020.
The expansion in capacity was completed as the economy slowed and the kingdom cut output, leaving Saudi Arabia sitting on at least 4 million bpd of spare capacity, more than double the 1.5 million to 2.0 million bpd cushion it aims to keep to meet any surprise outages in global supply.
"The new expansion is expected to enable Saudi Aramco to further increase crude production to 1 million bpd and increase the gas-oil ratio (GOR) of the field from 1,800 to 7,200 standard cubic feet per stock tank barrel (scf/stb)," GE said.
Aramco's crude output fell by a million bpd in 2009 to 7.9 million bpd from 8.9 million bpd in 2008 as the kingdom led OPEC in making steep production curbs.
The new Shaybah Natural Gas Liquids (NGL) plant which would process 2.4 billion cfd of sweet gas and extract 264,000 bpd of NGL is a key part of the expansion, the US company said.
Aramco is pressing ahead with the expansion of gas output to cater for rising domestic demand growing at 5 to 6 percent annually.
Shaybah NGL is one of two big gas projects Aramco is currently developing. The other is Wasit. Both are due online in 2014.