Japan ships to load Kuwait oil at sea to avoid risk

Refiner Japan Energy Corp said yesterday it will start receiving crude directly from Kuwaiti tankers, securing a steady supply of crude as war rages in Iraq.

A spokesman for Japan's fourth-largest refiner said it agreed to "ship-to-ship" transfers with Kuwait Petroleum Corp (KPC) because of concerns that Japanese sailors might refuse to enter waters near Kuwait due to safety issues posed by the U.S.-led action in Iraq, a Japan Energy spokesman said.

Elsewhere in the Gulf, tankers loaded on schedule.

"I have a sheet in front of me, which shows the ships are berthing as normal," said a shipping source at the main Saudi crude loading terminal of Ras Tanura, which can handle some five million barrels a day (bpd) of exports.

Other shipping sources in the UAE said they had not seen changes to the normal pattern of oil and commercial shipping in the vital waterway.

A Kuwaiti oil executive said so far only Japan Energy Corp and one other Japanese lifter had opted for ship-to-ship transfer. He said the Japanese lifters would bear the costs of the operation.

Oil carried by KPC-chartered tankers will be transferred to vessels chartered by Japan Energy in the southern Gulf, the spokesman said, adding that it was unclear how long the arrangement would last.

Japan imports almost all its crude oil, some 85 per cent or more of which comes from the Middle East. Its crude imports in 2002 totalled roughly 4.06 million barrels per day (bpd), of which Kuwait accounted for some 7.4 per cent.

Japan Energy has a very large crude carrier (VLCC) that was due to lift oil at the port of Mina Al Ahmadi on Sunday, but will now load ship-to-ship, the spokesman said. The company sends one or two oil tankers a month to Kuwait.

The move follows last week's decision by Nippon Oil Corp, Japan's largest oil refiner, to start using foreign-flagged vessels to lift crude from Kuwait and the Neutral Zone, an area between Saudi Arabia and Kuwait.

During the 1990-91 Gulf crisis and ensuing war, Japanese-flagged ships refused to sail into certain areas of the Gulf because of safety concerns.

A spokesman for Cosmo Oil Co Ltd, Japan's third-largest oil firm by sales, said on Monday it will continue to send its own tankers to Kuwait, barring any development that made the area dangerous.

He said, however, that it has begun to charter foreign vessels on a spot basis. "We plan to send our own ships...but should the need arise to charter a tanker on a spot basis we will look for a foreign vessel," he said.

Cosmo said the chartering of foreign ships was a precaution in case restrictions were imposed on Japanese ships due to safety concerns.

The spokesman said there had been no reports of any difficulty in loading in Kuwait.

A spokesman for the Japanese Shipowners' Association (JSA) said that while it was carefully watching developments in the Gulf it had so far not asked its members to stop ships from going into the area or taken other restraining measures.

"The situation is very different from the time of the (previous) Gulf War...it looks pretty much like business as usual so far," he said. "At the moment, each company is taking what it thinks is the best step," he said.

The JSA is an industry body for owners, charterers and ship operators.