News ID: 239234
Published: 0246 GMT February 22, 2019

Japan's refiners seek clarity over Iran oil waiver extension

Japan's refiners seek clarity over Iran oil waiver extension

Japanese refiners are seeking clarity on whether there will an extension to the 180-day sanctions waiver from Washington in March, as they hope to continue buying Iranian oil without any disruption, Petroleum Association of Japan's president, Takashi Tsukioka, said Friday.

Speaking at a press conference in Tokyo, Tsukioka said that the Japanese refiners are planning to load Iranian crude by March, as well as considering their options beyond May, S&P Global Platts reported.

In the absence of clarity over the extension of the US sanctions waiver in March, Tsukioka said the refiners' lifting of Iranian oil would stop in April. "It would be best to have clarity over the sanctions waivers by the end of March," Tsukioka said. "If decided in March, we will be able to continue loading [Iranian oil]."

Tsukioka also added that Japanese refiners would continue to buy spot Iranian oil whether or not their term contracts are renewed if the sanctions waiver is granted.

Showa Shell, Fuji Oil and Cosmo Oil were the first Japanese refiners to resume Iranian crude loadings in January – the first in four months – totaling around 4.9 million barrels. This was followed by JXTG Nippon Oil & Energy resuming loadings in early February. Idemitsu Kosan has also said it intends to resume its purchases of Iranian crude oil during the current US sanctions waiver.


Hopes for progress in talks

Asked about the outlook of talks with a top US State Department delegation in Tokyo, Tsukioka confirmed the visit as well as expressing his hope for progress toward securing the extension to the Iranian oil sanctions waiver.

"It would be beneficial for Japan to secure the sanctions waiver by all means," Tsukioka said. "We are hopeful of the government."

He added that the Japanese oil industry does not have any plans to meet the US State Department delegation during the visit.

Francis Fannon, the assistant secretary at the US State Department's Bureau for Energy Resources, is on a visit to Japan until February 26, following his visit to South Korea earlier this week.


Oil supply diversification

The State Department has said the assistant secretary's two-country tour will focus on energy security, regional cooperation on energy as well as highlighting the importance of energy diversification in the Indo-Pacific region.

The visit comes at a time when the East Asian oil consumers are calling for their 180-day sanctions waiver on Iranian oil imports to be extended beyond May.

South Korea's Deputy Foreign Minister Yun Kang-hyeon, Fannon and his counterpart "talked about the Iranian crude issue and South Korea's efforts toward diversification of sources of crude imports," a diplomatic source in Seoul said on Thursday.

SK Innovation, which has been South Korea's biggest buyer of Iranian crude, said Thursday it has been making efforts to diversify its crude sources.

"We have increased crude purchases from the US and other countries as alternatives to Iranian grades because it is uncertain whether the 180-day waiver will be extended," an official at SK Innovation said.

SK Innovation also received about two million barrels of Iran's South Pars condensate in January, which marked South Korea's first imports since September last year when the Northeast Asian nation fully suspended crude imports from Iran due to the reimposition of US sanctions.

All transactions under the US State Department's current "significant reduction exemptions" must be completed by May 4.

Fresh waivers would start May 5 for countries that the US determines to have been able to significantly reduce Iranian imports in the previous six months.



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