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Japan follows Korea’s path to Middle East oil security

Japan’s plan to lease out some of its oil storage facilities to Saudi Arabia and secure longer-term supply deals show Tokyo taking a page out of Seoul’s book on how to cut costs in its quest for energy security.

After decades of attempting to protect itself from oil supply disruptions by buying overseas fields or spending billions on government and industry stockpiles, Tokyo appears to be taking a new, more commercial tack in an increasingly competitive world.
On Japanese Prime Minister Shinzo Abe’s weekend trip through the Middle East, the world’s number-two crude importer proposed to rent out some of its oil storage tanks to Saudi Arabia, offering the kingdom better access to Asian markets while retaining the right to draw on the reserves during an emergency.

A day later, the Japan Bank for International Cooperation (JBIC) agreed to lend around $1 billion to state oil producer Abu Dhabi National Oil Co. (Adnoc), with a view to extending the term on import contracts to 10 years instead of the normal one year.

Both struck a chord in neighbouring South Korea, which has for years leased out state-run storage capacity to state oil firms from producer nations such as Algeria and Norway and, in 2004, agreed on a landmark 10-year supply deal with Kuwait.

Gulf News

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