Nippon Oil Inks Deal On Japan-NZ Emergency Oil Reserves
Nippon Oil Corp. is the first Japanese company to win a contract under a cooperative emergency oil stock agreement between Japan and New Zealand, The Nikkei reported in its Thursday morning edition.
The company and the Ministry of Economy, Trade and Industry are expected to announce the deal Thursday. Emergency oil stocks can be tapped by governments in times of disaster or war. METI has been trying to set up a regional reserve sharing system in order to help stabilize the price of oil and protect the East Asian economy.
Under the contract, Nippon Oil will hold up to 116,000 tons of oil for one year starting Tuesday, an amount equivalent to 80% of Nippon Oil's daily sales. The company is already required to keep a stock of 70 days' worth of sales according to Japanese law and currently has excess reserves equivalent to five days of sales.
Since Nippon Oil is thought to earn about Y100 million in option fees from the New Zealand government, the deal was judged to be an effective use of excess reserves.
Tokyo, Japan, Dec 26, 2007 (Dow Jones Newswires)
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Company: Japanese Ministry of Economy Trade and Industy (METI) more info
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