September 30, 2013 / 6:13 AM / 6 years ago

REPEAT-UPDATE 2-Asia's Iran oil imports fall 16 pct, long road ahead for any revival

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* Top Asian buyers’ Jan-Aug Iran oil imports fall to 927,860 bpd

* Asia’s Iranian imports at 865,650 bpd for Aug, up 30 pct y/y

* U.S.-Iran talks unlikely to lead to quick import boost

By James Topham

TOKYO, Sept 30 (Reuters) - Iran’s top four crude buyers cut their purchases by 16 percent in the first eight months of the year, with oil shipments set to remain under pressure from sanctions, despite tentative signs of better relations between Tehran and Washington.

Western sanctions have forced China, India, Japan and South Korea to reduce their reliance on Iranian oil, more than halving the OPEC nation’s exports since early 2012 and costing it billions of dollars a month in lost revenue.

The European Union and the United States believe Iran is developing nuclear weapons, while Iran says its programme is for electricity generation.

On Friday, U.S. President Barack Obama and Iranian President Hassan Rouhani spoke by telephone, the highest-level contact between the two countries in decades and the culmination of a dramatic shift in tone that began in August.

“It’s still a long way to go in terms of supplies of Iranian oil really starting to enter the market,” said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt’s Bulletin.

“You’ve had (about) 25 years of embargoes and concerns out of the region and that sort of thing will probably weigh on people’s minds and not be fixed overnight.”

The United States cut diplomatic relations with Iran a year after the 1979 revolution that toppled U.S. ally Shah Mohammad Reza Pahlavi and led to the U.S. hostage crisis in Tehran.

Friday’s call between Obama and Rouhani came after earlier remarks by the new Iranian president, who said he wanted talks with major powers on Iran’s nuclear programme to yield “tangible results” in a short period of time.

Still, any progress between Tehran and Washington towards a new agreement on Iran’s nuclear programme is likely to be slow, difficult and fragile.

The four major Asian buyers between January and August imported 927,860 barrels per day (bpd) of Iranian crude, down 16 percent from the same eight months in 2012, according to government statistics and oil tanker arrival schedules.

The four imported 865,650 bpd of Iranian oil in August, up nearly a third from a year earlier, the data showed. The big monthly jump was mostly due to South Korea not taking any Iranian crude in August 2012 because of EU restrictions on shipping insurance.


U.S. and EU measures have made it difficult for China, India, Japan and South Korea to insure oil shipments and have forced them to find new ways to pay Tehran since the Middle Eastern nation has no access to international banking networks.

The EU sanctions that prevent euro zone reinsurers from backing coverage for tankers carrying Iranian oil and refineries processing it have been some of the most effective measures in curtailing Tehran’s exports. Importers would need to see those restrictions ease along with the U.S. sanctions before they could start taking the oil in pre-2012 levels again.

To win waivers from the U.S. sanctions, buyers must continually reduce their shipments. Japan won its fourth six-month waiver at the beginning of September, while the other three will be up for a renewal of exemptions in early December.

Japan, the last of the four to release oil import data for August, shipped in 214,879 bpd of Iranian crude for the month, its trade ministry said on Monday. Its oil imports from Iran fell 2 percent year-on-year to 187,860 bpd for the January-August period.

In a sign that pressure is likely to continue on Iranian imports, an industry source said last week that Japan’s top buyer of Iranian crude, JX Holdings, was set to cut its annual contract with the Middle Eastern producer for next year by nearly 20 percent.

In India, only two refiners - Essar Oil and Mangalore Refinery and Petrochemical Ltd - are now importing Iranian oil, with the intake of crude down more than 40 percent to date in 2013.

Another former buyer of Iran’s oil, Hindustan Petroleum Corp Ltd, has said it does not intend to resume imports, having found suitable substitutes during halts over refining and shipping insurance issues.

South Korea, meanwhile, is near to making cuts of 15 percent for the six months through to the end of November compared with the December-May period, its unofficial target for winning a new waiver on U.S. sanctions.

South Korea’s imports from Iran between January and August were down 14 percent from the same period last year, according to data from state-run Korean National Oil Corp.

Chinese refiners have reduced their January-August imports from Iran by only about one percent from a year ago, but at 422,300 bpd, imports are not far off a minimum cut target of 5 percent from the previous year’s levels. (Editing by Aaron Sheldrick and Tom Hogue)

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