Asia Pulse: SHOWA SHELL DOUBLES OIL PURCHASES FROM SAUDI ARAMCO (ShellNews.net) 25 Feb 05

Feb 25, 2005

TOKYO, Feb 25 Asia Pulse - Showa Shell Sekiyu KK (TSE:5002) has signed a new contract with Saudi Arabian Oil Co., better known as Saudi Aramco, to double its oil purchases to 300,000 barrels a day.

The Japanese oil company will likely use the new contract to increase its purchases of light crude, demand for which has been surging, particularly from petrochemicals firms. Because Saudi Arabia produces various types of crude oil, Showa Shell will be able to buy larger quantities of different types of oil to meet customer demand.

While increasing intake from Saudi Arabia, the world's leading oil producer, Showa Shell plans to reduce its imports from the United Arab Emirates, Kuwait, Oman and other countries. But it will keep doing business with Iran, another of its key oil suppliers.

The move is aimed at cutting transportation costs. Showa Shell believes that concentrating on Saudi Arabia will enable the firm to save hundreds of million yen in annual shipping costs because it can load up tankers at Saudi Arabian ports rather than deal with ports in multiple countries.

Saudi Aramco owns a 10 per cent stake in Showa Shell. The major oil producer is expected to send an executive to serve on Showa Shell's board and plans to raise its interest in the Japanese company to 15 per cent in fiscal 2005.

(Nikkei)