Japan refiners eye force majeure clause for Iran oil contracts
Sunday, 19 February 2012 | 00:00
Japanese refiners should consider having a force majeure clause in term crude contracts with Iran in case they have difficulties making payments in the face of pressure from U.S. sanctions, the industry's top official said on Friday.
The United States, angry over Iran's nuclear programme, wants Japan's oil industry to cut back on Iranian imports but Japan must import swathes of oil in the wake of the Fukushima nuclear crisis and the country's refiners have yet to make significant cuts.
Japan, Iran's No. 3 crude buyer, is seeking an exemption from U.S. sanctions, which, if enforced, would penalise some Japanese banks for doing transactions with Iran's central bank.
The refiners say they have been waiting for instructions from the Japanese government about the size of any cuts to Iranian imports and note that as a trend imports from Iran have fallen gradually over the past few years.
"One thing is to reduce imports, but if a refiner cannot make the cuts, the firm would need to negotiate to have contractual flexibility," Akihiko Tembo, the head of the Petroleum Association of Japan, told reporters.
"If the banks cannot settle the payments even if the buyer wanted to pay, they should consider having a force majeure clause."
A delegation from Japan's government held talks in Washington earlier this month as part of ongoing consultations with the United States but did not reach an agreement.
Follow-up talks could come next week, industry sources said.
Iranian crude imports, which fell 11.7 percent last year to 313,000 barrels per day, account for 8.8 percent of Japan's total imports.
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