Saudi Arabia could store in Okinawa up to 16 percent of its term crude oil supply to Japan in a deal Tokyo hopes to seal by the end of the year, a Japanese official said Thursday.   

The agreement would ensure that Japan, the world's third-biggest oil consumer can tap the supply during emergencies while Saudi Arabia, the world's top crude exporter, strengthens its position in the increasingly competitive Asian market.   

"It will probably be one to two VLCCs (Very Large Crude Carriers) a month," Hidenobu Teramura, director for petroleum policy at Japan's Ministry of Economy, Trade and Industry (METI) told Reuters.   

Of the estimated 4 million barrels per day (bpd) of crude that Japan imports, around 20 percent or 800,000 bpd comes from Saudi Aramco, he said on the sidelines of the Asia Upstream conference organised by Global Pacific Partners.

"How much (storage) Aramco would like to use is still under discussion," Teramura said, adding that the Saudi oil giant is still studying how it will use the tanks and the duration of the lease.

The crude would become part of Japan's strategic reserves and could be used during times of emergency, he said.

Last December, Saudi Arabia's Oil Minister Ali Al-Naimi said the kingdom had accepted an offer to put "millions of barrels" of crude oil in free commercial storage in Japan. -Reuters