SAUDI ARABIA - Showa Shell Venture In Japan.

Saudi Aramco has 14.96% in Japan's Showa Shell Sekiyu, raised from 9.96% in June 2005. The increase raised Saudi Aramco's share in the world's third-biggest oil market. Saudi Aramco bought the 5% from Shell, as part of a 2004 deal under which the Saudi NOC acquired the initial 9.96% with an option for the further 5%. In June it was said the 5% would be worth 21.3 bn yen (US$714.92m), based on Showa Shell's closing share price on June 21. After the transaction, Shell's holding dropped to 35.04%.

With the initial deal in 2004, Saudi Arabia replaced the UAE as Japan's top crude oil supplier. Saudi Aramco nearly doubled its supply to Showa Shell to about 300,000 b/d. By increasing its stake in Showa Shell, Saudi Aramco now stands to profit more from sales of refined oil products in Japan. Saudi Aramco supplies about the same volume of crude to Japan's biggest refiner, Nippon Oil Corp., which accounts for about 25% of Japan's refining capacity of 4.76m b/d. In April, Saudi Aramco supplied Japan with about 1.09m b/d of crude oil - about 28% of Japan's crude oil imports of 3.84m b/d, according to the Ministry of Economy, Trade and Industry  (METI).

Showa Shell, Japan's sixth-biggest refiner, has a market value of about $3.9 bn. Its group refineries have a total capacity of 515,000 b/d. The arrangement with Saudi Aramco provides security of supply for the bulk of Showa Shell's refining needs. Increasing crude oil purchases from Saudi Arabia also helps Showa Shell to cut shipping costs as the company gets a single place to load a large quantity of crude oil, rather than having to arrange different tankers from various oil producers.