Japan's JX: Iran crude import may stop due to sanction
(Reuters) - Japan's top refiner JX Nippon Oil & Energy Corp will not be able to continue importing oil from Iran as tightening global sanctions against the Islamic Republic make it tough to pay for, ship and insure the oil, the company's senior executive said.
Japan has already drastically cut loading of Iranian crude since April as its refiners cannot rely on the European reinsurance market to cover tankers.
Industry sources have said Japanese buyers can no longer import Iran crude from July if the European Union does not grant an exemption from its planned ban on all European reinsurance, including the cover for pollution.
"If there is no one to accept insurance, we cannot effectively import (Iran crude)," Tsutomu Sugimori, JX senior vice president, told reporters on Thursday.
The statement is the latest sign that U.S. and European sanctions may be squeezing the revenues Iran makes from oil exports as they try to force it to halt a nuclear programme they fear will be used to make weapons, but which Tehran says is for power generation.
JX, one of the biggest buyers of Iranian crude along with Showa Shell Sekiyu, has put on hold its contract with Iran to buy 10,000 barrels per day of crude, which expired at the end of last month.
The company is taking into account the nation's pledge to the United States to cut imports from the Islamic Republic, Sugimori said.
JX has another contract for 80,000 bpd of crude from Iran, which was renewed in January.
MAY REFINING OUTLOOK
Sugimori said JX plans to refine 5.07 million kilolitres (1.03 million barrels per day) of crude oil in May for domestic consumption, up 12 percent from a year earlier.
Its April crude refining for domestic consumption was estimated at 5.79 million kl, up 24 percent from the year-earlier period but lower than its original plan of 6.10 million kl due to troubles at its Marifu refinery.
The refinery could stay shut for some time after sustaining some damage from an explosion and a fire at a neighboring glue factory operated by Mitsui Chemicals, company sources said.
The company plans to conduct scheduled maintenance on its 136,000 bpd Oita refinery from May 15 to June 13, as expected.
The refining volumes do not include condensate but include crude processed at its 51 percent-owned venture with PetroChina , called Osaka International Refining Co, which is an export-oriented 115,000 barrels per day (bpd) refinery.
The company, the wholly owned downstream oil subsidiary of JX Holdings Inc, operates eight refineries in Japan with total capacity of 1.61 million bpd including Osaka refinery. (Reporting by Osamu Tsukimori; Editing by Chris Gallagher and Jane Baird)