Japan's JX Nippon Oil & Energy, the country's largest refiner, has cut "slightly" its crude imports from Iran under a renewed annual contract starting this month, Chairman Yasushi Kimura Said, New York based Platts reported on Jan. 7.
JX Nippon Oil & Energy's confirmation of renewing Iran's annual crude import contract marked the first among Japanese buyers of Iranian barrels for 2014 import contracts. Refiners Showa Shell, Cosmo Oil and Idemitsu Kosan also have annual crude import contracts with Iran, expiring at the end of March.
Kimura said, however, that the reduction in volumes from Iran reflected falling Japanese demand as well as Japan's commitment to international sanctions on Iran and that JX had also reduced imports from other producers.
"We have concluded our annual contract starting from January," Kimura said on the sidelines of a reception in Tokyo hosted by the Petroleum Association of Japan, of which he is president.
"It [the volume] has been slightly reduced," he said. "Due to declining domestic demand, we also have reduced our [crude] imports from other producing countries other than Iran."
JX's actual contract volumes for both 2013 and the year ahead are unclear. Until December 2012, the company had an annual contract to import 80,000 b/d of Iranian crude. Like Iran's other customers in Japan, JX continues to buy Iranian crude under exemption from US sanctions that would otherwise bar Japanese banks from the US financial system. The waivers, renewable every 180 days, are granted in exchange for "significant" reductions in purchases of Iranian crude.
A preliminary six-month deal between Iran and six world powers on the nuclear issue, struck in November but yet to be implemented, gives Tehran some sanctions relief but maintains the core restrictions on Iranian oil.
Nevertheless, the agreement has raised hopes that a comprehensive agreement will be reached, leading to the complete lifting of sanctions.
"I think Japan is in a very interesting position," Kimura said. "While complying with the sanctions, Japan and Iran are maintaining their relationship as in the past."
"By maintaining a good relationship [with Iran], I am hoping to see a new framework when situations develop into the next stage."
As part of the preliminary deal on the nuclear issue, Washington has agreed not to press for further cuts in purchases of Iranian crude over the six-month period of the agreement.
In the meantime, according to industry sources, Iran's customers in Japan and South Korea are seeking to maintain their current import levels going into 2014.
Over the first 11 months of 2013, Japan imported an average 178,139 b/d of crude from Iran, down 5% from 187,958 b/d over the same period of 2012, according to data compiled by the Ministry of Economy, Trade and Industry.
However, Tokyo's imports of Iranian crude are well below pre-sanctions levels of 313,480 b/d in 2011 and 355,147 b/d in 2010.
In 2012, Japan imported just 189,076 b/d of Iranian crude, a drop of nearly 40% from the 2011 volume.
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