Japanese shippers will start loading on Friday their first cargo of Iranian oil in a month and a half, after the government provided insurance guarantees to replace EU coverage which was suspended due to sanctions against Iran, sources said.
The government signed contracts with two domestic shipping companies earlier this week to provide coverage for two super tankers, which are to load a total 3 million barrels of Iranian crude by the end of July for Japan’s biggest refiners, industry and government sources said.
One of these supertankers will start to load Iranian crude on Friday, the sources said.
Iran’s top oil buyer, China, will also load full contracted volumes of Iranian oil in July after refiner Sinopec and the National Iranian Tanker Co resolved a freight dispute, China-based oil officials said on Friday.
Japanese buyers stopped loading Iranian crude in June ahead of EU sanctions that took effect on July 1 and banned European insurers from covering tankers carrying Iranian crude anywhere in the world.
The EU measures have proved to be the hardest-hitting of the Western sanctions aimed at persuading Iran to curb its nuclear programme. The West believes Iran is building a nuclear weapon, while Tehran says the programme is for civilian purposes.
Japan had already cut its imports to comply with U.S. sanctions, but the EU measures had forced a complete halt.
The EU and U.S. sanctions combined have halved Iran’s exports to around 1.1 million barrels per day (bpd) in July compared to a year ago. Iran’s top four oil buyers in Asia are China, India, Japan and South Korea, and all have scaled back their purchases.
Japan won a waiver from the U.S. sanctions in March, after it cut Iran oil purchases by 17.6 percent between July and December from a year earlier, but it is keen to maintain imports from Iran to meet refiners’ needs.
Refiners and traders are estimated to have signed annual deals to import about 24-32 percent less Iranian crude this year than the previous year as they comply with the U.S. sanctions, industry sources said.
In the latest round of contract negotiations, Japan’s oil buyers agreed to import around 212,000-238,000 barrels per day of Iran’s crude over the next year, according to Reuters estimates based on industry sources.
That is between 75,000 bpd and 101,000 bpd less than last year’s average of 313,480 bpd.
Japan’s Iranian crude imports fell by a third in the first five months of this year to an average of around 246,000 bpd, government data shows.
JX THE BIGGEST BUYER
Japan’s top refiner, JX Nippon Oil & Energy (5020.T), which has a contracted volume with Iran of 83,000 bpd, has emerged as the country’s biggest buyer of Iranian crude, taking the top spot from Showa Shell Sekiyu (5002.T).
Showa Shell is likely to have reduced its contracted volumes to around 60,000-70,000 bpd, from last year’s import average of 100,000 bpd, one of the sources said. Showa Shell declined to comment.
Tehran’s top two oil buyers, China and India, have been forced to rely on Iranian tankers to deliver Iran’s crude as their governments have not provided sovereign insurance.
South Korea, the last of Iran’s top four customers, has stopped imports but is considering an offer from Iran to deliver crude on Iranian vessels.
(Editing by Simon Webb and Miral Fahmy)
Source: Reuters