April 18, 2012 - 18:00 AMT
PanARMENIAN.Net - Japanese refiner Showa Shell has renewed its term contract with the National Iranian Oil Co, with delivery starting in May, sources familiar with the matter told Platts.
A Showa Shell spokesman declined to comment when asked whether the company had renewed its term contract, which expired at the end of March.
Under the terms of the new contract, which is effective from April with volumes to be delivered in May, Showa Shell's loadings of Iranian oil are expected to fall below March volumes, the sources said.
They said Showa Shell's renewed contract came as time was running out for the company to make its loadings in April after months of delays in renewing its term contract. It was not immediately clear how much of a cut Showa Shell had made in its imports from Iran.
However, Platts reports, the company has said it intends to comply with an agreement reached last month between Tokyo and Washington exempting Japanese banks from U.S. financial sanctions in exchange for lower purchases of Iranian oil.
Showa Shell was Japan's biggest buyer of Iranian crude, importing 100,000 b/d of the crude under its previous contracts that expired at the end of March, sources said. Showa Shell is owned by Shell (35.04%), Saudi Aramco (14.96%) and public investors (50%).
Japanese refiners are understood to be reducing their purchases of Iranian oil by between 15% and 20% for the year ahead as part of the agreement between Tokyo and Washington. This is likely to result in a fall in Japanese imports of Iranian oil from an estimated 300,000 b/d in April to around 240,000 b/d once after April.
Because a VLCC takes 18-20 days to make a voyage from Iranian loading terminals to Japan, any crude loaded in April will not reach Japan till May.
Other Japanese buyers of Iranian crude are expected to conclude soon their import contracts starting in April, the sources said.
However, a spokesman for JX Nippon Oil & Energy, the second largest buyer of Iranian oil in Japan, said Tuesday that the company has not decided on whether to renew a contract, one of two that JX has with NIOC, for 10,000 b/d.