News ID: 237391
Published: 0314 GMT January 15, 2019

Japan banks to resume Iran oil transactions

Japan banks to resume Iran oil transactions

Major Japanese banks are set to resume Iranian oil transactions after receiving final regulatory clearance, paving the way for the country's refiners to begin loadings as early as this month, sources with direct knowledge of the matter told S&P Global Platts Tuesday.

The Japanese banks will be able to issue letters of credit for relevant deals after the clearance from the Japanese and US regulatory authorities, one of the sources who spoke on condition of anonymity said.

These banks are expected to accept payment by Japanese refiners for importing Iranian barrels mainly in yen, the source added.

Two of the Japanese banks declined to comment Tuesday.

Japanese refiners and shipping companies have recently clarified their concerns over relevant shipping insurance.

Japan's JXTG Holdings intends to resume loading oil from Iran at the end of January, while Cosmo Oil aims to load around 1.8 million barrels of Iranian crude at the end of this month upon final clearances, the presidents of the companies told Platts on January 7.

"We hope to resume [Iranian oil imports] as soon as possible," said Tsutomu Sugimori, president of JXTG Holdings, the parent of Japan's largest refiner, JXTG Nippon Oil & Energy. "As we see Iran as an important crude source, we intend to resume [the loadings] immediately as soon as it is clear to do so."

Shunichi Tanaka, president of Cosmo Oil, said it was awaiting final clearance from Japanese banks before moving ahead to resume loadings from Iran, after having its shipping insurance concerns clarified.

Spokesmen at JXTG Nippon Oil & Energy and Cosmo Oil said Tuesday that that the refiners are still preparing for the resumption of Iranian oil imports.

Japan was among eight countries to receive a 180-day waiver from US sanctions. The waiver expires in early May, when the country will be expected to cut purchases significantly. However, a lack of clarity over rules for shipping insurance had meant Japanese refiners were avoiding loadings of Iranian oil for January despite the waiver.

Japan did not import any crude from Iran in November. The country last recorded zero Iranian oil imports in July 2012 during the last international sanctions against Tehran. There was a brief suspension of loadings from Iran until the introduction of government-backed shipping insurance for protection and indemnity cover.

 

South Korea imports

South Korea, another major Iranian oil buyer that shut out supplies last year even before US sanctions on Iran took effect, is finally set to receive cargoes once again.

The National Iranian Tanker Company’s Silvia I is expected to reach South Korea – Tehran’s third-biggest customer before it stopped purchases in August – on Jan. 15, according to vessel-tracking data compiled by Bloomberg and released on Monday. The cargo could be the first of at least 14 million barrels from the Islamic Republic that will reach the nation’s shores through April.

Shipments are resuming after South Korea, along with some other buyers, managed to secure waivers from the US to continue buying Iranian oil even after American sanctions on the Islamic Republic went into effect in early November. The exemption was critical for the North Asian country as it allowed the purchase of 200,000 barrels a day of an ultralight oil known as condensate, which is used by several domestic refineries that are designed to process such supply.

Unlike other major buyers from Iran such as India and China, which only curbed buying from the Islamic Republic, South Korea entirely halted purchases under pressure from the US. Even after the US granted the exemptions, South Korea was unable to immediately resume purchases. They had to clear other hurdles surrounding insurance, shipping and payment before that.

Now, top refiner SK Innovation Co. is expected to receive two million barrels of Iranian South Pars condensate for arrival in January, according to traders with knowledge of the matter. Supplies could arrive in two Suezmax tankers with oil-carrying capacity of one million barrels each. Petrochemical producer Hanwha Total Petrochemical Co. has bought 12 million barrels of the oil for delivery in February to April. Details of Hyundai Oilbank Co.’s purchase plan remain unclear.

Demand for Iranian condensate has surged in the last five years after South Korean firms Lotte Chemical Corp. and Hyundai Oilbank jointly began operations at a unit known as a splitter in Daesan, while Hanwha Total brought online a new facility in the same region.

 

 

   
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