Japan refiners tap more oil from Middle East to replace Iran supply (updated)

Fuji Oil Co (Shinagawa)

09/05/2019 12:14

* Fuji Oil buys spot crude from Oman, Bahrain, Abu Dhabi
-sources
    * Cosmo says alternative oil for Japan to come from Middle
East
    * Fuji Oil president says expects no supply disruption 

 (Recasts with Cosmo Energy comments)
    By Yuka Obayashi and Florence Tan
    TOKYO/SINGPORE, May 9 (Reuters) - Japanese refiners are
tapping more oil from the Middle East after the United States
ended all waivers from sanctions on Iran starting from this
month. 
    Fuji Oil Co  5017.T  bought 1.5 million barrels of Oman
crude, Banoco Arab Medium from Bahrain, and Upper Zakum, an Abu
Dhabi grade, to load in June in a spot tender held last month,
according to trade sources.  urn:newsml:reuters.com:*:nL3N21U2L5  urn:newsml:reuters.com:*:nL3N21E1KY 
    "Alternative supplies to Iranian oil for Japan are likely to
come mainly from the Middle East given the existing supply
chains," Takayuki Uematsu, senior executive officer at Cosmo
Energy Holdings Co Ltd  5021.T , told an earnings news
conference on Thursday. 
    Alternative imports are not expected to come from the United
States - now the world's largest producer - as the U.S. crude is
lighter than Iranian crude, Uematsu added. 
    Iranian oil accounted for about five percent of Cosmo's
total procurement, and Japan's third-largest refiner feels
confident it will be able to secure enough supply from other
sources, he said. 
    Fuji Oil Co  5017.T  President Atsuo Shibota said he also
does not see any problems in securing oil supplies from sources
other than Iran but he expects it may raise costs by as much as
100 million yen ($911,000) a month for the company. 
    Fuji plans to secure alternative crude supplies through term
contracts and by tapping the spot market, he said. 
    "We are in a situation where we can buy crude from the free
market, so we don't expect supply disruption even without
Iranian oil," Shibota told an earnings press conference,
declining to say what suppliers Fuji would tap. 
    Takahiko Yamamoto, a Fuji Oil director, told Reuters after
the press conference that the refiner had already secured most
of its supplies for June, mainly through the spot market.
    Fuji Oil said Iranian oil accounted for about 20 percent of
the company's supplies in the financial year through March, down
from around 30 percent the previous year. 
    The United States reimposed sanctions on Iran in November
after pulling out of a 2015 nuclear accord between Tehran and
six world powers last year, although it allowed Tehran's biggest
buyers to continuing buying some crude oil via waivers for
another six months. 
    The sanctions have more than halved Iranian oil exports to 1
million barrels per day (bpd) or less. Washington, though,
aiming to cut Iran's sales to zero, said in April all sanctions
waivers for those importing Iranian oil would end at the
beginning of May.  urn:newsml:reuters.com:*:nL1N22410R 
    Iran says its oil exports will not drop to zero, although
its officials are bracing for a drop in shipments.  urn:newsml:reuters.com:*:nL5N22E6GJ 
    
    ($1 = 109.8100 yen)

 (Reporting by Yuka Obayashi in TOKYO and Florence Tan in
SINGAPORE; Writing by Aaron Sheldrick; Editing by Christian
Schmollinger and Tom Hogue)
 ((aaron.sheldrick@thomsonreuters.com; 81-3-6441-1320; Reuters
Messaging: aaron.sheldrick.thomsonreuters.com@reuters.net))