Oil Diplomacy Editor
Saudi Aramco, which last year accepted oil storage space in Okinawa from the Japanese government, will this month begin to send shipments of oil stored in Japan to the US West Coast.
ConocoPhillips has chartered the 600,000-bbl MT Blue Sea to load in Okinawa on Aug. 24, with the oil scheduled to reach Pacific Coast refineries by mid-to-late September.
Earlier this month, Aramco raised its official selling prices for light crudes to US customers for September shipments as it increased the prices of its two lightest grades for Asian buyers.
Aramco boosted the formula price for Arab Extra Light crude the most among grades to be shipped to the US, raising it by 75¢/bbl to a premium of $3 over the Argus Sour Crude Index.
Aramco said it increased Arab Super Light and Arab Extra Light crudes to Asia and cut its three other grades to the Far East. The producer raised all prices for European buyers, it said.
Aramco started shipping crude to Okinawa in February under an agreement with state-run Japan Oil, Gas & Metals National Corp. to store 3.8 million bbl of crude for 3 years.
While Aramco was mainly seeking to enhance the kingdom's access to northeast Asian markets, industry sources said the storage in Okinawa also provides a platform to increase exports to the US.
They said high-quality Asian crude grades, such as Saudi Arab Extra Light, are increasingly finding homes in California, Oregon, and Washington as production of Alaska North Slope crude declines.
"Saudi exports to the US via East Asia are to be viewed in the context of competition with Russia," one source told OGJ, noting that the US has also become the top importer of Russia's ESPO Blend crude.
The Russian oil began reaching East Asian markets following the launch of the East Siberia-Pacific Ocean Pipeline last year, with oil from East Siberian oil fields now being transported by rail to Russia's export terminal at the Pacific Coast port of Kozmino.
In May, Aramco sold its first oil cargo from the Okinawa storage tanks, selling 629,000 bbl of Saudi Arabian crude to South Korea's GS Caltex.
In December 2009, Saudi Arabia's Oil Minister Ali al-Naimi said his country had accepted an offer by the Japanese to store "millions of barrels" of oil in commercial storage in Okinawa (OGJ Online, Apr. 27, 2010).
In early 2010 PetroChina, eyeing shifts in world trading patterns, took over Aramco's lease on 5 million bbl of oil storage capacity at the NuStar Energy LP Statia terminal on the Dutch Caribbean island of St. Eustatius.
The facility, which was released after Aramco obtained the free oil storage facilities in Okinawa, is a strategically located hub for tankers plying the waters between North, Central, and South America and the Caribbean (OGJ Online, Jan. 12, 2010).