(MENAFN - Kuwait News Agency (KUNA)) Saudi Arabia is expected to agree to raise crude oil output in the event Japan makes an emergency request for additional supply, an arrangement designed to limit shocks to the Japanese economy, a top-selling business daily here reported Friday.
Japan's Economy, Trade and Industry Minister Toshimitsu Motegi will travel to Saudi Arabia on Saturday to conclude the supply agreement, which was proposed by Japan, the Nikkei Shimbun said.
The additional supply of oil would likely go mainly to power plants, the daily said, adding that the deal serves both countries' interests at a time when Japan is relying more on fossil fuels to generate power and shale gas supplies are rising worldwide.
Saudi Arabia supplies about 30 percent of Japan's crude oil, but the Saudis' ability to ramp up production is diminishing, and Japan decided it needed to establish a supply cooperation arrangement, the newspaper said.
The two countries will also establish a ministerial hotline for use in extraordinary circumstances, such as terrorist attacks or political unrest in the Middle East, or a spike in the price of oil.
After Riyadh, Motegi will move on to Abu Dhabi on Sunday. Japan is seeking stronger ties with Middle Eastern oil producers to ensure energy stability as the corporate sector feels the pinch of higher electricity prices -- the result of substituting fossil fuels for nuclear power.