31-08-2018

Japan remains firm on seeking US exemption for Iran oil imports: top official

Japan remains firmly committed to seeking US exemption for Iranian oil imports as it sees the supplies as important for the country’s energy security and businesses, a top government official told S&P Global Platts on Thursday.

“Japan’s position remains firm even after the second round of talks [with the US government],” Ryo Minami, the director-general of oil, gas and mineral resources at the Ministry of Economy, Trade and Industry said in an interview.

“Our basic principle is to seek an exemption [from the US],” Minami said.

Asked whether Japan was also looking to reduce its Iranian oil imports in order to secure US sanction waivers, Minami declined to comment.

Japan and the US held a second round of talks on the US’ Iran sanctions in Washington over August 1-2, when the two sides agreed to continue bilateral discussions.

“During the second round of talks Japan clearly explained its position to continue [Iranian oil] imports to the US in an effort to gain their understanding,” Minami said.

“Looking forward, we will inevitably have to hold talks with the US government solidly to obtain their understanding,” he said. “From the Japanese perspective, we see the import of Iranian crude oil as necessary to continue Japan’s energy security, as well as considering the impact on Japanese companies.”

Minami’s comments came as Japanese refiners have urged the government to seek a US waiver on Iran sanctions as they are keen to continue importing the usual volumes instead of reducing inflows.

But local refiners are finding it increasingly difficult to maintain their Iranian oil imports as the US sanctions loom.

Asked about the possibility of Japan suspending Iranian oil imports, Minami said: “That will basically be up to private companies.”

“For us, making the Japan-US talks successful is the best way forward,” he said.

On August 8, JXTG Holdings, the parent of Japan’s largest refiner JXTG Nippon Oil & Energy, said it will decide this month on whether to continue importing Iranian oil cargoes loading in September.

But a JXTG Nippon Oil & Energy spokesman said Tuesday: “We expect to comply with the Japanese government’s guidance following the bilateral talks, but we have not received any specific instructions.”

“We are currently considering our response,” the spokesman added, declining to elaborate further.

US sanctions on Iran’s oil customers resume November 4 and could remove up to 1 million b/d of global oil supply.

Japan’s oil imports from Iran surged in May and June as refiners rushed to secure as many cargoes as possible before US sanctions go back into force. This helped cut Japan’s year-to-date decrease in Iranian oil imports to just 3% from a year earlier, compared with a cumulative 13% drop over January-April.

Over January-June, Japan imported an average of 162,222 b/d of Iranian oil, down 2.7% on the year, accounting for 5.3% of total crude imports, compared with 153,074 b/d imported over January-April, when Iranian supplies accounted for 5.0% of total supply and were down 13.1% year on year, according to METI data.

Source: Platts

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