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Japan’s Fuji Oil considers whether to sign new term contract for Iranian imports

Japanese refiner Fuji Oil Co is considering whether to sign a new contract for Iranian crude imports after Japan received a waiver from U.S. sanctions on Tehran, its top executive said on Thursday, adding that Iranian oil is competitively priced against rival grades.

The company is one of the heaviest users of Iranian oil in Japan, with Iranian crude accounting for roughly 30 percent of the oil processed at its 143,000 barrels per day (bpd) Sodegaura refinery between April and September, its president, Atsuo Shibota, told reporters.

Company officials did not give the exact volume processed at the firm’s sole refinery, but one official said it ran at full capacity during the six months. However, the share accounted for by Iranian oil was down from 36 percent in the business year that ended on March 31.

“We bought during the first six months (of the business year) but we were scheduled to buy throughout the year, so we have suspended it,” Shibota said during the company’s six-month earnings announcements.

“We are considering whether to resume (purchases) by taking into account the cost and grade quality. It is not clear whether we would go with the original contract or buy via a separate arrangement.”

The United States granted exemptions to Iran’s biggest oil clients – Japan, China, India, South Korea, Taiwan, Italy, Greece and Turkey – which allow them to import at least some oil for another 180 days.

Shibota said that the Japanese government had not given it any information on the volumes of imports that would be allowed, adding that it would like to retain diverse options for oil purchases even beyond the 180-day exception.

Fuji Oil has previously bought all Iranian crude via term contracts, a second company official said.

Japan joined South Korea in temporarily halting Iranian oil loading around mid-September.

The country imported about 172,000 bpd of Iranian crude in 2017, down 24.2 percent from 2016, and accounting for 5.3 percent of total crude imports, trade ministry data showed.

Meanwhile, Cosmo Energy Holdings has been notified by the government about the waiver and will consider whether to resume imports of Iranian oil, Senior Executive Officer Yasuhiro Suzuki told reporters on Thursday during the six-month earnings announcement.
Source: Reuters (Reporting by Osamu Tsukimori Editing by Joseph Radford and Kirsten Donovan)

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