Saudi Aramco and the Japanese government are set to agree on a roughly two million barrel expansion of crude storage capacity in Okinawa, used by the state-run firm to store oil, Saudi Aramco CEO Amin Nasser said on Thursday.
Under an agreement with Tokyo, Saudi Aramco and Abu Dhabi National Oil Co (ADNOC) each store up to one million kilolitres (6.3 million barrels) of crude oil in Okinawa, southwest of mainland Japan.
In return for providing free storage space, Japan gets a priority claim on the stockpiles in case of an emergency.
“It would be in the best interest for Saudi Aramco and Japan to increase the capacity,” Nasser told reporters in Tokyo. “We are looking at a couple of million (barrels) more than what we have now.”
A senior Japanese government spokesman confirmed the two sides had agreed to expand and extend the current storage deal, though details had not been decided.
A source familiar with the matter told Reuters the deal was set to be signed in October.
Nasser is accompanying Saudi Arabia’s powerful Deputy Crown Prince Mohammed bin Salman on his visit to Japan this week, along with Saudi Arabia’s Energy Minister Khalid al-Falih and other ministers.
Japan treats the crude oil stored at Okinawa as quasi-government oil reserves, counting half of the barrels stored by Aramco and ADNOC as national crude reserves.
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.
Also on Thursday, Aramco signed memorandums of understanding on business cooperation in Tokyo with Japanese companies including three major banking groups.
The storage pact comes as part of a broad cooperation agreement between Saudi’s Prince Mohammed and Japan’s Prime Minister Shinzo Abe who met on Thursday to discuss the kingdom’s drive to cut its reliance on oil exports among other issues.
The two countries agreed to set up a ministerial forum, called “joint group for Japan Saudi vision 2030”, to discuss their collaborations in industry, finance and energy to contribute to Japan’s growth strategy led by Abe as well as Saudi’s economic reforms driven by Prince Mohammed.
The first meeting will be held in Riyad in October.
Under the agreement, Saudi’s top sovereign wealth fund Public Investment Fund (PIF) and state-owned Japan Bank for International Cooperation (JBIC) and state-backed Innovation Network Corporation of Japan (INCJ) will also consider jointly investing in, and jointly financing, projects.