* Cuts 2014 contract volume by 20,000 bpd to 53,000 bpd
* JX cuts to help Japan reduce 2014 Iran imports by 11 pct
* Cuts come as JX cuts contract volumes from other suppliers
By Osamu Tsukimori
TOKYO, March 14 Japan's biggest refiner JX
Nippon Oil & Energy has cut its annual crude contract with Iran
by 27 percent, an industry source said, a move that will likely
keep at bay any potential U.S. pressure over oil shipments from
the Islamic republic.
Under the November deal that eased some of the sanctions
directed at Tehran's nuclear programme, top oil clients China,
India, Japan and South Korea were to keep their imports near
end-2013 levels of an aggregate 936,000 barrels per day (bpd).
Together, though, the four took 1.25 million bpd in January,
with increases in China and India outweighing on-year reductions
from Japan and South Korea.
Indian government sources said this week that refiners there
will have to cut their oil purchases by nearly two-thirds from
first-quarter levels after a U.S. energy official reminded them
that Iranian import volumes were not to rise.
That was the first clear sign of U.S. intolerance to higher
exports from Iran, and came after India's January intake of
Iranian crude doubled to 412,000 bpd from the previous month.
JX Nippon Oil & Energy, a unit of JX Holdings Inc,
opted to cut its 2014 contract for crude from Iran to 53,000
bpd, from 73,000 bpd last year, said a source familiar with the
matter who declined to be identified.
The cut was in keeping with reductions to contracts from
other crude suppliers such as Saudi Arabia that come as Japan's
domestic demand weakens and refiners close down crude units,
said the source.
JX has cut its refining capacity nearly 600,000 bpd over the
last five years due to Japan's shrinking home market and a
government efficiency mandate.
"Iran crude is relatively expensive and JX is likely to
reduce crude processing by about 3 percent this year, so I think
JX cut Iran volumes considering those factors," said Osamu
Fujisawa, an independent oil economist.
The reduction amounts to an annual loss of around $800
million for Iran at current prices, according to Reuters
The cuts of 20,000 bpd were slightly more than expected,
with the source saying in September that JX would cuts its 2014
imports from Iran to around 60,000 bpd.
JX spokesmen declined to comment, citing confidentiality
agreements with Iran.
Japan reduced Iranian imports by 6.2 percent to 177,414 bpd
last year, compared with a 0.9 percent decline in total oil
Even if other Japanese buyers lifted the same volumes from
Iran this year as last year, the nation's imports would fall to
157,414 bpd, down 11 percent on year.
Tough measures introduced by Western powers in 2012 slashed
Iranian oil exports by more than half, before an agreement on
Nov. 24 eased some sanctions and allowed access to $4.2 billion
in frozen oil payments in return for steps by Tehran to curtail
its uranium enrichment activities.
Tehran denies claims from Washington and other Western
capitals that its nuclear programme is aimed at building an
atomic weapon, saying it is for power generation.
Other Japanese buyers of Iranian oil, which sign annual
supply contracts starting in April, are likely to have already
begun renewal negotiations, but the agreements may not come
until later this month or next month, sources said.
The other companies include the refiners Showa Shell Sekiyu
, Cosmo Oil Co and Idemitsu Kosan Co.
It is not yet known if the other Japanese refiners plan to
reduce their contractual volumes or hold them level.
(Editing by Aaron Sheldrick and Tom Hogue)