Saudi Aramco and Japanese firm extend Okinawa crude storage deal

Japan’s Trade and Industry Minister Hiroshige Seko
Updated 19 January 2017
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Saudi Aramco and Japanese firm extend Okinawa crude storage deal

TOKYO: Japan Oil, Gas and Metals National Corp. (JOGMEC) has signed a contract with Saudi Aramco to extend a crude oil storage deal on the island of Okinawa by three years.
Under the agreement, Saudi Aramco can store up to 1 million kiloliters (6.3 million barrels) of crude oil on the island southwest of mainland Japan for the next three years, JOGMEC said in a statement.
The volumes are unchanged from the previous three-year deal, which is expiring this month. Japan and Saudi Aramco had earlier been discussing expanding the Okinawa crude storage by about 2 million barrels.
The volumes could still rise during the three years of the new contract, depending on the Japanese government’s budget and the availability of tank space, a JOGMEC official said.
In return for providing free storage space to Saudi Aramco, Japan gets a priority claim on the oil stocks in an emergency.
Saudi Aramco has stored crude in Okinawa since February 2011, and has used the facility to supply oil to China, Japan and South Korea among others.
Japan has a similar storage deal with Abu Dhabi National Oil Co. (ADNOC) under which the oil company can store the same volume of crude at the facilities at Kiire in Kyushu, southwest Japan.
Japan treats the oil stored by Saudi Aramco and ADNOC as quasi-government inventory, counting half of the barrels as part of the national strategic crude reserves.
Officials in Tokyo said Japan has agreed to allow the Abu Dhabi firm to store crude oil in the country for two more years, giving the nation’s second-largest supplier continued access to a depot through 2019.
The agreement came during a recent meeting between Japan Trade Minister Hiroshige Seko and ADNOC chief executive Sultan Al-Jaber in the United Arab Emirates (UAE), Japan’s Ministry of Economy, Trade and Industry said in a statement.
Tokyo has given UAE free crude storage since 2009. The arrangement had been due to expire at the end of this year and was extended to the end of 2019, a trade ministry official said.
Under the deal, ADNOC can store up to 6.29 million barrels (1 million kiloliters) at Kiire oil terminal in Kagoshima, southern Japan at no cost.
The deals with Saudi Aramco and ADNOC provide the two biggest oil suppliers to Japan easy access to Asian markets while giving the country priority access to the reserves if it is in short supply.
The government counts half of the barrels stored by Saudi Aramco and ADNOC as part of the national strategic crude reserves.


Moody’s upgrades Egypt’s rating to B2, expects more economic growth

Updated 18 April 2019
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Moody’s upgrades Egypt’s rating to B2, expects more economic growth

  • Moody’s believes Egypt’s large domestic funding base would support its resilience to refinancing shocks
  • The ratings agency expects energy price hikes as part of Egypt’s fuel subsidy reform

CAIRO: Rating agency Moody’s has upgraded Egypt’s sovereign rating, saying ongoing economic reforms will help improve its fiscal position and boost economic growth.
Moody’s upgraded the long-term foreign and local currency issuer ratings of Egypt to B2 from B3. The outlook was changed to stable from positive.
The decision was based on “Moody’s expectation that ongoing fiscal and economic reforms will support a gradual but steady improvement in Egypt’s fiscal metrics and raise real GDP growth,” the agency said in a statement late on Wednesday.
Moody’s also said it believed Egypt’s large domestic funding base would support its resilience to refinancing shocks despite the government’s very high borrowing needs and interest costs.
Moody’s said it expected a steady improvement of Egypt’s fiscal position, “albeit from very weak levels.”
Maintained primary budget surpluses combined with strong nominal GDP growth would help reduce the general government debt/GDP ratio to below 80 percent by the 2021 fiscal year from 92.6 percent in the 2018 fiscal year, it said.
Egypt’s fiscal year runs from July to June.
Moody’s also said it expected energy price hikes as part of Egypt’s fuel subsidy reform, which it believed would be completed in the 2019 fiscal year. This, along with the fiscal reforms implemented in the last few years, would allow the government to maintain the primary budget balance in surplus in the next few years, Moody’s said.
The upgraded rating was expected, but still good news for Egypt, said Allen Sandeep, head of research at Naeem Brokerage.
“It should help its case for new international bond issuances as we move forward,” he said.
Egypt is pushing ahead with tough economic reforms as part of a three-year $12 billion IMF loan deal signed in 2016.
The reforms, aimed at attracting investors who fled during the 2011 uprising, have included new taxes, deep cuts to energy subsidies and a currency devaluation. The reforms have helped the economy recover, but have also put the budgets of tens of millions of Egyptians under strain.