Japan's Deal with Saudi Aramco to Store Crude Oil

Japan has signed a deal with Saudi Aramco allowing the country to increase the utilisation of its oil storage facilities, and will give the Saudi Arabian company increased access to oil storage in the lucrative Asian market.

A deal between Japan and Saudi Aramco will allow the state-run Saudi Arabian company to store crude oil on the southern archipelago-province of Okinawa. The deal follows a similar agreement with Abu Dhabi in mid-2009. Faced with declining oil demand, Japan has a rising surplus of storage capacity, allowing it to use storage deals to increase utilisation while improving energy security.

The deal between Saudi Aramco and Japan will start in 2011 when the first vessel, which will have a capacity of 1.9mn barrels (bbl), is scheduled to arrive at Okinawa. On the deal, Saudi Aramco will be allowed to store about 600mn litres in Okinawa, equivalent to 3.8mn bbl. The deal will run for three years, in order to allow Japan to restock its crude oil reserves.

Aim of Aramco is to establish storage bases in or near major Asian consuming markets in order to be able to meet spikes in demand quickly. Japan's proximity to China, the engine of global oil demand growth, is crucial in this respect. A storage-sharing deal will also benefit Japan. Its oil demand is declining, with the trend exacerbated by the impact of the global economic crisis, leaving it with surplus storage capacity. Not only will crude stocks from Saudi Arabia raise its storage utilisation rate, but Japan will also have priority access to the stocks in emergencies. Allowing Aramco to stockpile crude at Okinawa will therefore contribute to Japanese energy supply security, a major concern for the government.

The partnership with Saudi Arabia follows a similar agreement with UAE in June 2009, when Japan and the UAE signed a deal to allow the Abu Dhabi National Oil Company (ADNOC) to store crude oil in the Kiire oil terminal operated by Nippon Oil. Also, Japan has first rights to the stocks in emergency situations. As long as Japan maintains its priority access to tap the crude and products stored by third parties in the country in the event of a supply shock, joint storage deals with Middle Eastern producers can be of strong mutual benefit.

The enactment of the Oil Stock Law (1975) established that Japan had to be prepared for disruptions to oil supply. In 1978 the government authorised Japan Oil, Gas and Metals Corporation (JOGMEC) to regulate national oil storage levels. The government maintains a Strategic Petroleum Reserve (SPR), which includes 10 state-controlled storage facilities managed by JOGMEC. Furthermore, the state leases tanks from the private sector to boost its strategic reserves capacity. As well as government-managed reserves, Japanese law obliges private companies to stockpile oil products to cover a mandatory 70 days of their consumption, equivalent to around 308mn bbl in 2009.

Petronas See More Oil And Gas In Water Resources

With the increasing oil prices, Malaysia through the sale of oil revenues will also be increase. And recently, Petronas has found 2 more blocks that have the potential to produce oil in Block SK316 and SK306.

These discoveries support Petronas’ strategy to intensify exploration activities in Malaysia and is expected to further enhance exploration potential offshore Sarawak.

In Malaysia there are the National Depletion Policy of limiting production at the 600-700k barrels / day. The aim is that the point of production can be maintained in time for 15-20 years. The United States also is a major oil producer and a major importer as well. In 2009, an average of U.S. issued a 5.268M barrels / day and net imports of not less at 10.5M barrels / day.

Which means, from the reasons given Malaysia has been using more oil than the amount of oil released. Just as "budget deficit" we are now, used by more than ability.

But in terms of history, exploration Petronas is never broken. Always keep doing exploration work throughout the world through multinational companies.

The following are some of the exploration activity of Petronas:

• In Kelantan, 1 oil block has been successfully explored together with Thailand (Carigali - PTTPI Operating Company).
• In Kerteh, exploration by Petronas in Block West Ladder Platform has just sail out of the Pasir Gudang & Moss.
• The first platform in Kerteh Filter A is still the most expensive product & priced in the world than in the 70s until now.
• While the first Paltform Petronas West Lutong in Miri still have more production from the Petronas was established.
• This is new in the waters of Malaysia has yet to venture outside, such as Petronas Sudan, Vietnam, Qatar, UAE, Myanmar is known for the high cost of petroleum.
• If the oil fields in Malaysia will be depleted Petronas will not renew the contract with ExxonMobil for the purpose of exploring for the past 50 years. Petronas will not dare to take over TCOT (Trengganu Crude Oil Terminal) from ExxonMobil, LCOT (Labuan) from Shell, Bayan, D-18, D-35, Block PM-9 (Pulai & Tinggi).
• Murphy Sarawak Oil has already been explored for more than 10 blocks to be developed.

The issue here can manage treasury "black gold" that held all this time with the best?

China Hunts Energy Fields

China continues to pursue the fields in different parts of the world's energy sources to meet domestic fuel demand over the high rate of economic growth.

Chinese national oil producers increasingly keen to buy shares of oil companies of the world. Not just an asset, even to spend enough in order to obtain the technology to extract resources that are difficult to reach. Chinese oil companies also continue to comb the emerging markets to continue to bid in 2011, and probably until near the United States (U.S.).

Diesel, petrol and gas demand in China increased by about 8 percent each year. Chinese oil demand will peak in 2025. To meet these needs China's energy companies seem to be racing to buy the world's oil reserves. The year 2010 was the record high oil and gas acquisitions made by Chinese who reached an agreement worth U.S. $ 24.3 billion, larger than in 2009 was only U.S. $ 17.1 billion.

Largest China's deal is undertaken by the Chinese Government-owned oil company Petrocemical acquire 40 percent stake in Repsol Brazilian assets worth U.S. $ 7.1 billion. This suggests China to expand to South America. This purchase is the largest purchase compared with other countries over the past year. This also indicates that China is willing to pay more than the market expected.

Chinese oil companies continue to diversify its source - the source of hydrocarbon. And they have excess jurisdiction where U.S. and European oil companies have been politically difficult to reach agreement in Sudan, Myanmar, Iran and Syria.

They also can extend the hunt until the Gulf of Mexico, where independent companies tend to release their assets there because of increased insurance costs and increasingly stringent regulations after an explosion at BP's refinery Macondo in April last year which resulted in the largest offshore oil spill in U.S. history. China's giant energy company, CNOOC also has purchased a small share of offshore oil projects in the Gulf owned by Norway's Statoil.

Given that three-quarters of world exploration company headquartered in the U.S., the Chinese tend to bid for U.S. firms. All the objectives of the acquisitions would lead China to North America within the next two years.

CNOOC in 2005 never to bid against California Unocoal, which then failed after some U.S. lawmakers oppose the deal on the grounds of national security. However, in 2010 CNOOC successfully acquire oil and gas assets in the project Eagle Ford Shale in South Texas for U.S. $ 1.1 billion.

One - an attraction for Chinese energy companies are buying these projects using new technology that could extract energy from unconventional sources like oil sands or gas trapped in coal. The project is attractive to Chinese buyers because they provide an opportunity not only to collect hydrocarbons only, but also to learn new technologies to develop the potential of China's large gas reserves.

Chinese state-owned enterprises, Sochem Group is buying 40 percent stake in Peregrino, offshore Brazil from Statoil worth U.S. $ 3.07 billion in May 2010. Although there may be no oil to be sent to China after a successful production next year. But they traded with the local product state energy company that operates outside the country.

Chinese enterprises are also increasingly competing among one another and not the state that determines the winner. So the likelihood of success in the auction of a property abroad is determined by their own.