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© (c) Copyright Thomson Reuters 2016.Saudi Aramco, Japan to expand Okinawa crude storage deal
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SenseNotSoCommon
Off topic at the talks: democracy, human rights and religious freedom.
5SpeedRacer5
Bbbut I have been assured by numerous experts posting on this site that Japan, with no natural resources, will have to go hat in hand and beg the Russians for oil and gas. And here the Saudis are willing to just leave all of this oil with Japan in a huge deal? How can that be?
Read it and weep Putin fans. Japan has puhlenty of countries willing to jump through all kinds of hoops to sell fossil fuels to Japan at and below market price. The Saudis, Iran, Qatar, the Emirates, Brunei, Indonesia, Malaysia, Australia, Canada, the US, even Mexico. Did I say Nigeria?
Certainly this deal is mutually beneficial and it symbolizes that fact that the Japanese like Saudi crude and the Saudis love to have a stable country to do business with. Russia has jerked so many people in so many deals that it deserves its place at the back of this gravy train.
And regarding democracy, human rights, and religious freedom, I am pretty sure that the Saudis have a lot more of all of that than they did in the 1950s. Take a look around and you will see many countries that have barely held their own, or which have gone backwards. Steady stable improvement from the Saudis can be expected. And you can't blame them for being wary of other people's slogans these days.
Mlodinow
5SpeedRacer5 it doesn't say that Aramco are offering the oil at discounted prices. They are only storing their own oil here and the price will be negotiated separately.
serendipitous
Poor Okinawa. They get all the crappy deals.
bullfighter
Indeed. I wonder if anyone in the Abe administration thought to consult with the Okinawan people on this?
Don't bother to tell me. I can guess the answer by myself.
toshiko
Another Okinawa story. Share rent; price to OkinWan people. Or is this step two. to empty AmericN bZd
5SpeedRacer5
"5SpeedRacer5 it doesn't say that Aramco are offering the oil at discounted prices"
No. "It" does not "say" it. I don't get all my news from JapanToday. Do you?
Splitting hairs applies here. I said the Saudis are willing to sell to Japan at less than market prices. That is true. Other countries are too. I did not say that this transaction is for "a discounted price." The beauty of this transaction is that Japan does not have to pay ANY price TODAY for this oil, and the Saudis can PUT this oil at today's price. The Japanese basically get a call option on it, and the Saudis get a covered put. The Saudis also get some empty tankers, which is nice. Plus they can collateralize it and make more money.
It just so happens that the Saudis and Japan have ongoing negotiations and contracting. When an article comes out like this, well, most people have no context whatsoever. A bunch of question marks appear over their head because, well, "why does this matter? What's going on? I heard about the Saudis in high school. Human rights. Oil. Have to post something...."
But to anyone who is paying attention, you can see a gigantic game of tit for tat. A little give here a little take there. Does anyone reading this story even have a notion that the same people making these deals are the same people making the pricing and allocation and refining deals? The Saudis have been losing market share in Asia, so they are trying to shore that up without OFFICIALLY lowering the price of oil. What is probably happening here is that Japan is allowing these strategic stores that do not lower the officlal price on paper, today. In the future, Japan will be able to use up its other stores at less than market price, and the Saudis will eventually write down the oil in storage, or let Japan have it for some price. It is a win, and everyone who did the deal knows it. The Saudis keep market share and the market price. Japan gets cheaper oil in the future and control over the oil in an emergency.
There is an even wider context, but it is just pleasing to me to see so much win-win in this difficult environment. Japan is a great customer and the Saudis are a great vendor. Wonderful to see these deals come together.
Russia would love to work deals like this, maybe with North Korea, right?