Japan's Cosmo Oil replaces Iran's oil with other supplies from the Middle East

SINGAPORE (Reuters) – Japanese refiner Cosmo Oil has replaced its imports of Iranian crude oil with supplies from other Middle Eastern producers ahead of US sanctions against Iran in November, company officials said.

Japanese refineries, the fourth-largest crude oil importer in the world, halted oil imports from Iran in mid-September, the country's refinery association said last week.

"Japan will not import Iran crude in November because of US sanctions," Cosmo Oil President Shunichi Tanaka told Reuters before the Asia-Pacific Petroleum Conference (APPEC).

Saudi Arabia, the UAE and Kuwait are providing more crude oil to Cosmo Oil to replace its deficit of 10,000 barrels per day (bpd) against Iran, which is 5% of refiner's imports.

Some of these producers went to Japan and "have told us, if you need more crude oil, we can provide you," said Cosmo Oil's procurement director, Masashi Nakayama.

The Organization of the Petroleum Exporting Countries (OPEC) and other oil producers are planning to increase production by 500,000 bpd to counter the drop in supply from Iran.

"Saudi Arabia has room to produce more oil to cover. They can not cover everything, but they can cover something and the impact on the whole market is not so important, "said Nakayama.

Under previous US sanctions, some buyers benefited from waivers as long as they reduced their imports, but the current administration aims to reduce Iran's oil exports to zero in order to force Tehran to negotiate a treaty nuclear.

However, Japanese trade officials will travel to Washington at the end of September to try to negotiate sanctions exemptions, the leaders said.

JAPAN

Cosmo Oil, a unit of Cosmo Energy Holdings in Japan (5021.T), is the third largest oil refiner in the country in terms of sales.

The refiner will start supplying fuel to local wholesaler Kygnus Sekiyu K.K. from 2020, which is expected to increase Cosmo's market share in Japan from 11% to 15%, Tanaka said. Cosmo bought 20% of Kygnus in 2017.

In the coming winter, kerosene oil imports could rise in Japan following natural disasters that disrupted local refiners in the third quarter.

Typhoon Jebi caused flooding in western Japan when an earthquake shut down the only Hokkaido refinery owned by Idemitsu Kosan (5019.T), since September 6th.

"The recent typhoon and earthquake in Japan has had a significant impact on Japanese refineries as some have had to close or reduce their rates," said Tanaka, adding that Cosmo Oil is striving to secure supplies. in kerosene. winter.

Before IMO 2020, when the vessels will have to switch to significantly lower sulfur fuels, Cosmo Oil will stop producing high sulfur fuels once it has developed its late cok into the Sakai refinery by the end of the year. 2019.

The refiner has announced that it will also install scrubbers on half of the six very large crude carriers that it is chartering in the long run.