On January 13, 2020, with Mr. Abe Shinzo, Prime Minister of Japan, and H.H. General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, the United Arab Emirates (UAE), attending, Mr. Makihara Hideki, State Minister of Economy, Trade and Industry, and H.E. Dr. Sultan Ahmed Al Jaber, Minister of State, UAE, signed and exchanged, in Abu Dhabi, UAE, an agreement on continuation and expansion of the existing joint oil storage project.
This agreement stipulates that the two countries will expand the amount of oil stockpiles up to 1.30 million kl. Amid the growing tensions in the Middle East region, it is considered important for Japan to fortify the relationship with Abu Dhabi, a major crude-oil supplier to Japan, and to improve Japan’s crisis response ability.
Overview: On January 13, 2020, taking the opportunity of a summit meeting held in Abu Dhabi, UAE, between Prime Minister Abe and Crown Prince Mohammed, State Minister Makihara and Minister Jaber signed and exchanged an agreement on continuation and expansion of the existing joint oil storage project, with the prime minister and the crown prince attending.
Outline of the project: In this project, Japan, with the support of its government, will lend crude-oil tanks installed in Japan to the Abu Dhabi National Oil Company (ADNOC), UAE, while, in ordinary times, the company will make use of the tanks as bases for supplying oil to Japan and other East Asian countries and, if Japan faces a shortage of crude-oil supply in an emergency, the company will preferentially supply the crude oil remaining in the tanks to Japan. The project was inaugurated in June 2009 in response to the proposal presented by Abu Dhabi that same year, and this is the second extension of the project.
This agreement stipulates that the two countries should extend the project for three years with a two-year automatic extension and should increase the amount of oil in the rented tanks from the current 1 million kl (approximately 6.29 million barrels) to 1.30 million kl (approximately 8.17 million barrels) according to a request from the other party. Crude oil of 1.30 million kl is equivalent to approximately four days’ worth of oil consumed in Japan.
Amid the growing tensions in the Middle East region, this agreement is significant for Japan in that it fortifies the relationship with Abu Dhabi, an oil producer which Japan depends on for approximately 25% of its total import of crude oil, and also improves Japan’s crisis response ability.