Japan to double Iran crude loadings in August

A tanker docks at oil refineries in Yokohama, south of Tokyo in this August 31, 2005 file photo. (REUTERS/Issei Kato)

TOKYO: Japanese refiners will load about 7 million barrels of Iranian crude in August, industry sources said Thursday, more than double the amount loaded in July, as government-backed shipping insurance encouraged purchases despite EU sanctions.

Japan is Iran’s third biggest oil buyer and the sovereign guarantees will help it circumvent an EU ban on insuring Iranian oil shipments which, combined with U.S. sanctions, has halved Iran’s crude exports.

Other major Asian oil buyers are asking Iran to ship oil on its own tankers to get around the EU ban.

The sanctions are aimed at cutting Iran’s oil revenues and forcing it to curb a nuclear program the West believes will be used to develop weapons, which Iran denies.

Two Japanese industry sources said the August loadings represent about 226,000 barrels per day, which is about 25 percent less than a year earlier and in line with contractual volumes agreed earlier this year.

The amount will help Iran recoup less than a quarter of the $110 million it loses a day in oil export earnings due to the sanctions. South Korea is also planning to resume buying Iranian crude in September, which would further boost Iran’s earnings.

Three very large crude carriers, capable of carrying 2 million barrels each, loaded oil at Iranian terminals this month, according to ship tracking data. A ship typically takes between 23 and 24 days to sail from Iran to Japan, so these cargoes will account as imports in August or September.

Japan loaded 3 million barrels of Iranian crude in July. It suspended loadings in June ahead of the EU ban, which took effect on July 1, while the government finalized a sovereign insurance scheme that now provides cover of up to $7.6 billion for oil shipments from Iran.

EU insurers underwrite most maritime shipping, and insurers elsewhere have been unable to offer cover for the billions of dollars in claims that could stem from a spill.

The lack of cover had prompted Iran’s main oil buyers Japan, China, South Korea and India to reduce imports. To get around it, China, India and South Korea are asking Iran to deliver crude on Iranian tankers, which shifts the responsibility to Iran for insurance.

The first Japanese tanker loaded with Iranian oil after the EU ban took effect will dock at Idemitsu Kosan’s 160,000 bpd Aichi refinery in central Japan Monday, according to shipping data.

The Ryuho Maru, which loaded on July 20, is also set to deliver Iranian oil to JX Nippon Oil and Showa Shell Sekiyu, an industry source said.

Japan has already scaled back its purchases of Iranian crude to ensure an exemption from U.S. sanctions, which target financial institutions dealing with Iran’s central bank.

A version of this article appeared in the print edition of The Daily Star on August 10, 2012, on page 5.




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