<article><p class="lead">Kuwait's state-owned KPC has agree to lease over 3mn bl of crude storage capacity in Japan, as part of a deal to optimise the company's supplies to Asia and increase Japan's energy security.</p><p>KPC has agreed with the Japanese government to lease 500,000 kilolitres (3.1mn bl) of capacity at the Kiire oil terminal in Kagoshima prefecture in the south of the country. KPC will store its own crude in the tanks and use it to optimise commercial supplies to its Asian customers. But in cases of emergency, KPC will supply the crude to Japan on a priority basis. The first oil is scheduled to reach the tanks by March 2021.</p><p>Japan already has similar contracts with <a href="https://direct.argusmedia.com/newsandanalysis/article/2031103">Saudi Arabia's state-controlled Saudi Aramco</a> and <a href="https://direct.argusmedia.com/newsandanalysis/article/2050557">Abu Dhabi's state-owned Adnoc</a>. Aramco is leasing 1.3mn kl (8.2mn bl) of capacity in Okinawa, while Adnoc has access to 1.3mn kl of tank space at the Kiire terminal that will also hold the Kuwaiti crude. The Kiire terminal is owned by Eneos, Japan's biggest refiner.</p><p>Tokyo has been selling off some of its stockpiled oil through tenders in recent years, as falling domestic demand has built up an excess of stocks. But this has coincided with more storage deals being agreed with oil-producing countries, in line with Tokyo's energy strategy to build good relationships with Middle East countries given the country's high dependence on Middle East oil. </p><p>The capacity covered by the Aramco and Adnoc deals has increased to 8.2mn bl from the original levels of 3.8mn bl agreed in 2010 and 2009 respectively.</p><p>Japan relied on Middle East supplies for 90.2pc of its crude imports in October, up by 0.8 percentage points from a year earlier. Its Middle East dependence averaged 84.9pc in 2019.</p><p>Japan imported around 173,000 b/d of crude from Kuwait in October, down by 33.3pc from a year earlier, according to data released yesterday by the country's industry ministry (Meti). Imports averaged 253,000 b/d in 2019.</p><p class="lead">Maiko Nakashima</p></article>
