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Japan to import Yemeni Masila crude oil for the first time since 2015

Tokyo/Dubai — Japan is set to import a Masila crude oil cargo from Yemen for the first time since 2015 as part of its efforts to expand its supply sources. The move to scout around for cargoes beyond its traditional suppliers and outside the Gulf of Aden area comes at a time when the region in the Middle East is witnessing prolonged geopolitical concerns.

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JXTG Nippon Oil & Energy is to receive the Masila crude cargo on the Ambelos Aframax tanker at its 135,000 b/d Sakai refinery in western Japan Monday, according to market sources.

Around 200,000 barrels of crude was loaded on to the Ambelos, a Bahamas-flagged 114,600 dwt vessel, which is about to head into Osaka Bay, according to S&P Global Platts trade flow software cFlow.

A source close to Yemeni oil production said that the cargo loaded on the Ambelos tanker in late July and was bound for Japan. Japan last imported 233,723 barrels of Masila crude from Yemen in 2015, according to Ministry of Economy, Trade and Industry data.

JXTG had been looking at procuring Masila crude oil from Yemen among possible supply options as it had bought the crude occasionally in the past, market sources said.

Masila crude has an API gravity of around 34.09 with a sulfur content of 0.51%, according to market information. The Yemeni crude is similar to Russia's ESPO blend in quality.

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RESUMING EXPORTS

The Yemeni government has completed repairs to a key crude export pipeline, allowing it to ship its first cargo in three years from the Bir Ali terminal on the Gulf of Aden on July 29.

The Saudi-backed government had been pushing international oil companies for months to restart production from the central Marib and Shabwa basins-- its two key oil-producing regions.

Production from Shabwa was restarted in April after being shut for more than three years due to the war between Yemen's Houthi militants and the Saudi-led coalition, which imposed a blockade of Yemeni ports preventing exports, shutting in production. Most of the fighting is focused in the north of the country along the border with Saudi Arabia and the Houthi-controlled capital Sanaa. Shabwa is around 300 km to the east.

OMV became the first international oil company to restart crude oil production in Yemen in April, and has already increased output to around 2,000 b/d from the Habban field in Shabwa's block S-2, according to sources close to the matter.

It had been producing at around 23,000 b/d before it declared a force majeure in April 2015, with the onset of the war. The Vienna-based company said in April that it hoped to ramp up rates at the 350 million-barrel field to between 10,000 b/d and 12,000 b/d in 2018.

OMV is the operator of the block with a 44% stake, along with China's state-owned Sinopec, which holds a 37.5% interst with the remainder held by Yemen's state-owned oil companies.

Before the conflict, most of Yemen's crude was shipped from the Ash-Shihr terminal in the Gulf of Aden, along with Ras Issa on the Red Sea. Ash-Shihr was captured by Al-Qaeda in 2015, but the militants withdrew a year later, allowing exports to resume in July 2016 with Glencore winning a tender to lift 3 million barrels of Masila crude.

Glencore has been reportedly lifting around 2 million barrels every two months since January 2017. The barrels mostly head to Asia. Ras Issa, however, remains occupied by Houthi forces.

-- Takeo Kumagai, takeo.kumagai@spglobal.com

--Adal Mirza, adal.mirza@spglobal.com

--Edited by E Shailaja Nair, newsdesk@spglobal.com