In December 2009 Saudi Arabia's oil minister Ali al-Naimi said his country had accepted an offer to store millions of barrels of oil in commercial storage in Japans Okinawa islands, something which now looks set for the end of the year.
We expect Saudi Aramco to start by the end of this year, Hidenobu Teramura, director for petroleum policy at Japan's Ministry of Economy, Trade, and Industry (METI), comments.
Further signaling this shift, Aramco last December relinquished its Caribbean storage in St. Eustatius to PetroChina (OGJ Online, Jan. 12, 2010).
Saudi crude exports to the US dropped to 989,000 b/d in 2009 from 1.503 million b/d in 2008the time volumes have fallen below 1 million b/d since 1988.
As a result, Saudi Arabia, which is currently producing just over 8 million b/d of oil, now exports more than 50% of its output to the Asian market, which is expected to account for the bulk of future demand growth.
In what may be a move to begin clearing space for Saudi Arabia to store its crude on the island Japan already has offered oil from its reserves on Okinawa. Japan is offering 220,000 kl of Kuwaiti Khafji crude and about 260,000 kl of Iraqi Basra Light crude, according to a tender document on METIs web site.
Under the tender offer, for which bids will be opened on 30 April, the oil will be released from tanks the government rents at the Okinawa Oil Base and shipped between 10 June and 9 September.