His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and Shinzo Abe, Prime Minister of Japan, witnessed today the signing of the UAE-Japan Strategic Energy Cooperation Agreement between the Abu Dhabi Supreme Petroleum Council, represented by Abu Dhabi National Oil Company, ADNOC, and the Agency for Natural Resources and Energy of Japan, for the storage of over 8 million barrels of crude oil at storage facilities in Japan.
The agreement extends and expands the previous strategic crude oil storage agreement between the two nations that expired at the end of 2019. Under the terms of the new agreement, which has an initial three year period, ADNOC will store crude oil at storage facilities in Japan which may be traded to customers, whilst ensuring that certain quantities of crude oil are available in the event of an oil shortage event in Japan.
The agreement was signed by Dr. Sultan bin Ahmad Sultan Al Jaber, Minister of State and ADNOC Group CEO, and Makihara Hideki, Japan's State Minister of Economy, Trade and Industry.
Dr. Al Jaber said: "The new agreement with the Agency for Natural Resources and Energy to store Abu Dhabi crude oil in Japan further strengthens the excellent working relationship between the UAE and our Japanese counterparts. Under the wise guidance of our leadership, the UAE has fostered a deep and longstanding relationship with Japan that spans many decades. We are pleased to extend and expand our storage agreement which positively contributes to Japanese energy security, while also supporting ADNOC's broader trading ambitions."
Makihara said: "The UAE has been one of the most important crude oil suppliers to Japan for a very long time. The Joint Oil Storage Project is a most symbolic and mutually beneficial project for both countries and will contribute to the improvement of Japan's energy security as well as the UAE's access to Asian markets. Given the current world geopolitical situation, it is well-timed to expand our Joint Oil Storage Project. I really hope that our bilateral relationship between Japan and UAE will be further strengthened through the project."
Japan is ADNOC's largest international importer of oil and gas products with approximately 25% of its crude oil imported from the UAE. The company has a long history of mutually beneficial strategic partnerships with Japanese oil and gas companies that span over four decades and cover the entire oil and gas value chain.
In recent years, as part of ADNOC's 2030 smart growth strategy, Japanese oil and gas companies have been awarded concession agreements. In 2015, Japan's INPEX Corporation (INPEX) was awarded a 5% stake in the Abu Dhabi Onshore Concession. In 2018, the Japanese firm was also awarded a 10% stake in the new Lower Zakum offshore concession and at the same time, also extended its 40% stake in Satah and increased its stake in Umm Al Dalkh from 12% to 40%. Last year, ADNOC awarded the exploration rights for Abu Dhabi Onshore Block 4 to INPEX.
In November 2019, Intercontinental Exchange Inc (NYSE:ICE) announced that INPEX and JXTG along with eight of the world's largest energy traders including ADNOC would partner with ICE on the launch of ICE Futures Abu Dhabi, a new exchange that will host the world's first Murban crude oil futures contract.
Both the UAE and Japan enjoy strong bilateral economic relations dating back to 1961 when the first shipment of UAE crude oil was exported from Umm al-Shaif offshore field in Abu Dhabi to Japan.
In recent years, trade between the UAE and Japan has grown with the most recent figures showing that Japan exported goods to the UAE to the approximate value of $7.9 billion while the country imported goods from the UAE to the approximate value of $27.5 billion in 2018.
Source: UAE Ministry of Foreign Affairs