TOKYO (Reuters) - At least two of Asia's four top buyers of Iranian crude will keep imports flowing, though at overall reduced rates, as they find ways around an EU ban on insuring tankers carrying the Islamic country's oil.
Asia needs oil to feed growing demand and top consumers are reluctant to entirely halt imports from Iran and depend entirely on top exporter Saudi Arabia, especially given that output from other alternative suppliers such as Libya and Iraq has not stabilized.
Japan has secured a parliament approval that allows the government to provide insurance cover, while China is asking Iran to take on the risk and deliver the crude on their ships. South Korea and India have yet to find a way out.
Together, Japan and China have nominated loadings for as many as 620,000 barrels per day of Iranian oil next month, sources said on Wednesday. A year ago, the Islamic Republic was selling around two-thirds of its crude exports, or roughly 1.45 million bpd, to these four Asian buyers.
In less than two weeks, the four Asian buyers who are Iran's biggest customers will lose access to European insurers that cover 95 percent of the world's tankers for oil spills and collisions, as western countries seek to curtail Tehran's disputed nuclear program.
India's government, which has won an exemption to U.S. sanctions, has been trying without success to figure out how it will get around the EU sanctions.
South Korea will halts imports due to the insurance ban, industry sources have said.
Seoul, like Tokyo, has lobbied the EU to delay or get a waiver on implementing the ban on insurers. It is not considering state guarantees, according to government sources.
Those lobbying efforts have so far failed. The European Union will not cancel or delay the embargo on Iranian oil tankers, EU Energy Commissioner Guenther Oettinger said at an industry conference a week ago.
The International Energy Agency said last week that Iran's crude exports in April and May have fallen by 1 million bpd since the end of 2011 to 1.5 million bpd and that Tehran may need to shut in production. <IEA/M>
Worries about a supply disruption from Iran had boosted oil prices to a high of over $128 a barrel In March. Prices have come off those highs, and are nearly down 25 percent in part due to increased supplies by Saudi Arabia and concerns about a slowdown in the global economy.
Unipec, the trading arm Sinopec Corp (0386.HK), requested Iran to deliver July-loading crude cargoes to Chinese ports, sources said. One source estimated Sinopec will lift about 500,000 bpd for July, a level similar to the average amount the top Asian refiner bought from Iran last year.
The Unipec request suggests that China hasn't worked a permanent way to cover China-flagged tankers which have been transporting at least part of the Iranian oil.
"Short-term this may work, but that is not a long-term solution. The government needs to come up with a plan soon to coordinate on this matter," said an industry official.
China is the only major buyer that hasn't got an exemption from U.S. financial restrictions on doing business with Iran.
A senior Chinese oil executive told Reuters last week that the European insurance ban would not pose a problem, and that Iran delivering the crude on its own tankers would be one of the options.
The executive also said Sinopec has since April been lifting a steady amount of Iranian oil versus last year, although for the whole of 2012 the refiner would import 16-20 percent less than 2011.
Japan has been able to continue with the imports as the country's parliament on Wednesday approved an unprecedented law that allows Tokyo to provide cover of up to $7.6 billion for incidents involving tankers bringing Iranian oil to the country.
Japan, which needs more oil to fire power stations after the Fukushima disaster shut the country's nuclear capacity, nominated loadings of 120,000 bpd for both June and July, sources said, unchanged from May.
Japan's biggest buyers of Iranian oil, Showa Shell Sekiyu KK (5002.T) and JX Nippon Oil & Energy Corp (5020.T), are to load a total of four vessels in June, steady from May, with shipments arriving this month and next, traders said on Wednesday,
Showa Shell is Japan's top buyer of Iran oil this month, they added. Neither company would comment on their oil dealings with Iran.
Japan's law on covering shipments will take effect on June 27, a government official who requested anonymity said on Tuesday.
Overall crude oil imports rose about 7 percent in May from a year earlier, government data showed on Wednesday.
Iranian oil accounted for nearly 9 percent of Japan's crude imports last year. Japan has reduced the flow already to comply with U.S. sanctions requiring buyers to make sizeable cuts, but wants to avoid more drastic reductions that could drive up energy import costs and hurt the world's third-largest economy.
It is the first time Japan has sought to provide guarantees on marine shipments, an official in the country's transport ministry, which sponsored the legislation, said earlier.
Additional reporting by Risa Maeda in Tokyo; Writing by Manash Goswami; Editing by Aaron Sheldrick and Ed Lane