January 7, 2014 / 11:21 AM / 4 years ago

Japan's Idemitsu, Cosmo unlikely to raise Iranian crude imports

TOKYO, Jan 7 (Reuters) - Two Japanese buyers of Iranian crude, Idemitsu Kosan and Cosmo Oil, are unlikely to raise imports from the Middle Eastern country even after sanctions were eased as part of an initial deal on Tehran’s disputed nuclear programme.

Executives with the two refiners said on Tuesday they have no plans to increase their contract volumes following the November deal between world powers and Iran that allowed Tehran to keep oil exports at around 1 million barrels per day (bpd), about half of pre-sanction levels.

Japan’s biggest importer of Iranian crude, JX Holdings Inc , had also earlier said it would not be increasing its Iran volumes in 2014.

That is in contrast to China, which may buy more Iranian oil this year as a state trader is negotiating a new light crude contract that could raise imports from Iran to levels not seen since tough sanctions were imposed in 2012.

Idemitsu has already cut its Iranian crude contract volume for the year ending March 31 to 5,000 barrels per day (bpd) from 7,000 bpd a year ago, but it has no plans to halt its Iranian imports and end its decades-old relationship with Tehran.

The reduced amount is the minimum level for purchases to make commercial sense, Idemitsu President Takashi Tsukioka told Reuters at a New Year gathering for Japan’s oil industry.

At the same event, Cosmo Oil President Keizo Morikawa also said his company is unlikely to increase purchases from Iran.

“It is unlikely we can raise volumes now because (domestic) demand is declining,” he said, adding that it remains unclear how much it would be allowed to import under U.S. sanctions.

Cosmo Oil will slightly reduce its Iranian oil imports from April, after its current annual contract expires, an industry source familiar with the matter told Reuters in November.

Cosmo has cut its Iranian imports to 15,000 bpd or less in the business year through March 2014, from 40,000 bpd two years ago, industry officials have said.

As part of the November deal, buyers of Iranian oil, most of whom are in Asia, are no longer required to continuously reduce purchases from the OPEC member to qualify for a waiver from U.S. sanctions every six months.

JX renewed its annual contract for importing crude from Iran for 2014 with volumes steady to slightly lower compared to last year, an official said last month.

Japan struggled to cut its Iranian crude purchases last year after reducing them more than 40 percent in 2012.

Japan imported about 178,539 bpd of Iranian oil in the first 11 months of 2013, down 4.6 percent from the previous year, trade ministry data showed last month. (Reporting by Osamu Tsukimori; Editing by Aaron Sheldrick and Tom Hogue)

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