Saudi Arabia Wants to Refine Oil in Japan

Saudi Arabia, which has the world’s largest supply of crude oil, wants to start oil refining and marketing in Japan, a move that may force reorganization of Japan’s oil industry, a leading economic journal says.

Nihon Keizai Shimbun reported Sunday that Saudi Arabia has already sounded out the Japanese Ministry of International Trade and Industry as well as the Resources and Energy Agency about the possibility.

The Japanese government is ready to cooperate with Saudi Arabia on the condition that it allow Japanese participation in oil development projects, agree to a stable supply of crude oil in the event of a crisis and contribute to the improvement of the Japanese oil industry, the paper said.

Masashi Yamamoto, director of the Resources and Energy Agency, will visit Saudi Arabia in January to prepare for high-level negotiations on the project in March, the daily said.

It said Saudi Arabia is strongly interested in steady growth of oil demand in Japan and wants to establish a government-financed oil refining and distribution system to compete against major U.S. and European oil firms.

The Saudis’ direct entry into the Japanese market may intensify competition and trigger reorganization of the domestic industry, the daily said.

The timing and scale of the Saudi project were not known, but it would take at least two to three years to come through, the paper said.

Saudi oil minister Hisham Nazer said in September that his country plans to refine and sell petroleum products worldwide, especially in Europe and Asia.

Earlier this year, Saudi Arabia bought a 50% share of three Texaco Inc. refineries in Saudi Arabia and 10,000 service stations in the Eastern United States for $2 billion to help the third-largest U.S. oil company fight a takeover attempt.