Tokyo: Japan’s top buyer of Iranian crude JX Nippon Oil & Energy has cut by 12 per cent the volume it plans to import under an annual deal, an industry source said, helping ensure the world’s third-largest oil consumer remains exempt from US sanctions on Iran.

The cut will reduce JX’s imports from the Opec-member by 10,000 barrels per day (bpd) from a year earlier to 73,000 bpd, said the source who has direct knowledge of the matter. That’s a loss of around $420 million for Iran for the full year at today’s prices, according to Reuters calculations.

The US requires buyers of Iranian crude to show they are reducing purchases every time it renews a six-monthly waiver from sanctions aimed at forcing Tehran to abandon a controversial nuclear programme. Tough measures by the West slashed Iranian oil exports by more than half last year as buyers struggled to pay for the oil and find tankers to ship it.

Iran says it is enriching uranium to fuel power plants, not make bombs.

JX had two annual contracts with Iran, one with a larger volume running from January-December and a smaller one from April-March. The company only renewed the bigger contract last year, and cut the volume by 10,000 bpd from a year earlier to 83,000 bpd. The second one, for 10,000 bpd, has been on hold after expiring in March 2012 and remains so, the source added.

The refiner imported the full volume agreed under the January-December deal, the source said. The source declined to be identified because terms in the contract bind the buyer and seller to confidentiality.

A JX spokesman declined to comment.

Japan slashed Iranian imports by 40 per cent to 189,076 bpd last year, even though total oil imports rose 2.7 per cent.

The US renewed waivers from sanctions for Japan and 10 European countries in September, and Japan’s waiver is up for renewal next month.

Further cuts

Japan’s imports from Iran are likely to be capped at roughly 160,000 bpd in 2013 and may possibly be lowered further, equivalent to a cut of 15 per cent or more from a year earlier, Yasushi Kimura, president of the Petroleum Association of Japan and chairman of JX, said in December.

Other Japanese buyers of Iranian oil, which sign annual supply contracts starting in April, typically start talks on renewal around mid-February. They include Showa Shell Sekiyu, Cosmo Oil and Idemitsu Kosan.

Japan’s second-biggest buyer of Iranian crude, Showa Shell, is waiting for guidance from the government on crude imports from Iran before deciding on contractual volumes for the year starting April, its president said on Monday.

Showa Shell is estimated to have cut its contracted Iranian crude volumes to around 60,000-70,000 bpd for the year that will end March 31 from 100,000 bpd a year earlier.

Cosmo Oil has also cut volumes to about 15,000 bpd in the year to March 31 from about 40,000 bpd a year earlier, an industry source familiar had told Reuters in January.

— Reuters