Japanese refiners have temporarily suspended Iranian oil loadings ahead of US sanctions, while they are also closely monitoring government talks with Washington on securing a waiver to continue their imports, Petroleum Association of Japan President Takashi Tsukioka said at a press conference Thursday. Asked whether Japanese refiners have suspended their Iranian oil loadings beyond October, Tsukioka said: "I understand that each company's position [over Iranian oil loadings] is the same, to have suspended them while monitoring the situation."
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"The companies are also taking a flexible approach to be prepared to respond, depending on how the situation develops," he added.
Speaking at a press conference in Tokyo, Tsukioka said that it would be up to individual refiners to take their own decisions on Iranian crude oil imports. But he said that it would be "of great importance" to the Japanese oil industry to maintain its "favorable" relationship with Iran as a major supplier.
"From the point of view of stable petroleum supplies, we are still hoping to ask the government to negotiate tenaciously with the US government to achieve an exemption for Japan from its sanctions against Iran," Tsukioka said.
"Currently, refiners are closely monitoring the Japan-US governmental talks, and the best [outcome] to would be to get an exemption," Tsukioka said, declining to elaborate on each refiner's response on Iranian oil imports.
LAST LOADING BEFORE SANCTIONS
Tsukioka's comments came as a Japanese buyer loaded what appears to be the last Iranian oil cargo for arrival in early October, ahead of US sanctions, as local importers step up procurements from alternative sources.
VLCC Yufusan is scheduled to arrive Japan on October 3 after loading oil at Assaluyeh and Kharg Island in Iran and Mina Al Ahmadi in Kuwait, according to S&P Global Platts trade flow software cFlow.
Japanese imports of Iranian oil in October will come at a time when the government is still pressing the US to allow Japan to continue importing Iranian oil, while leaving refiners to make their own decisions over their imports as US sanctions loom on the horizon.
Japanese refiners are expected to settle all Iranian oil transactions by the end of November 2 (Japanese time) because US sanctions snap back on November 5, according to a source familiar with the matter.
President Donald Trump said on May 8 the US would withdraw from the Iran nuclear deal and re-impose sanctions that have been frozen since January 2016 as part of the Joint Comprehensive Plan of Action.
NO SIGNIFICANT, IMMEDIATE IMPACT SEEN
With the approach of US sanctions, Japanese refiners have stepped up alternative crude imports from the Middle East and elsewhere.
Commenting on Japanese refiners' crude alternative procurements, Tsukioka said: "I understand that companies with a large lifting volume of Iranian crude have started the appropriate alternative [procurements]."
"Other [companies] are dealing with it by exercising their contractual tolerance or buffer based on their [supply] contracts," Tsukioka said. "I do not see a significant impact immediately."
Some Japanese refiners have covered shortfalls in Iranian oil supplies
from Qatar, while a Japanese buyer of Iranian Oil is looking at Abu Dhabi's Upper Zakum crude, Bahrain's Banoco Arab Medium and US Mars crude as among alternative supplies to Iran's Medium and Heavy grades, according to sources.
Japan's Iranian oil imports increased year on year for the third consecutive month in July as refiners rushed to take cargoes before US sanctions come into effect in November.
The surge in Iran exports during May, June and July cut Japan's January-July decrease in Iranian oil imports to just 1% year on year, compared with a cumulative 13% drop over January-April.
Over January-July, Japan imported an average of 165,343 b/d of Iranian oil, accounting for 5% of total crude imports, compared with 153,074 b/d imported over January-April. Iran was also the fifth largest crude supplier over January-July.
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