Japanese oil refiner Showa Shell Sekiyu K K has increased its crude oil imports from Saudi Arabia by 60 per cent to 240,000 barrels per day (bpd) from the previous 150,000 bpd, thanks to its first direct purchase contract with the kingdom which was signed late last year.

Showa Shell will further boost import volumes from Saudi Arabia to 300,000 bpd later in 2005, with the aim of cutting its crude oil procurement and logistics costs, a company executive said.
The crude supply deal with the state-owned Saudi Aramco, was inked late last year after Aramco completed the acquisition of a 10 per cent equity stake in Showa Shell.
This increased reliance on the kingdom as its main crude import source is in stark contrast to efforts by other Japanese oil refiners to diversify their crude import sources.
In a separate step, Aramco has agreed to buy another five per cent stake in Showa Shell by the end of this year.
'Lifting more crude oil at one single port, the Ras Tanura Port in the kingdom, we can ship crude much more efficiently to our refineries in Japan, and slash our logistics costs,' managing director Shigeya Kato said.
An oil refiner typically will have to pay extra freight costs if it fills a very large crude carrier, or VLCC, by taking on oil from more than one port.
Showa Shell aims to expand its one-port crude loading by increasing its reliance on Saudi Arabia as its main import source. According to the Saudi Information Ministry, Ras Tanura is the world's biggest petroleum port.
Showa Shell is expected to reduce its overall crude logistics costs as much as three billion yen ($27.5 million) a year.
With its existing long-term supply contract with Iran and the new Saudi deal, 'we've gained our best crude portfolio from light-grade crude oil rich in kerosene and gasoline, and the heavy-grade, fuel oil-rich crude,' Kato said.
To counterbalance the increased supplies from Saudi Arabia, Showa Shell has trimmed the volume of its spot market crude purchases, and has also cut its imports of heavy-grade crude from other oil producing nations.
In the years before the direct supply contract with Saudi was signed, Showa Shell had imported crude oil from the kingdom through Royal Dutch/Shell Group and Japanese trading houses.
Separately, Showa Shell imports about 145,000 bpd of crude oil from Iran through its long-term contract.
A major benefit from the crude deal with Aramco is to have access to large volumes of the Arab Extra Light crude, a popular grade of crude among Japanese oil refiners as it is rich in gasoline and kerosene.
'The contract is flexible,' said Kato, suggesting Showa Shell may be able to adjust its monthly import volumes of Saudi light-grade and heavy-grade crude oil, depending on the demand situation at home.
Showa Shell is now importing roughly 200,000 bpd of Arab Extra Light crude, compared with an average of 100,000 bpd imported last year before the contract with Aramco was signed.  Japanese oil refiners traditionally require light-grade crude oil in winter season, in order to increase output of kerosene, the main heating oil in Japan.