Ja­pan, S Korea Wary of Load­ing Iran Oil in Jan

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TOKYO (Dis­patches) - Ja­panese and South Korean re­fin­ers have so far re­sisted load­ing Ira­nian oil for Jan­uary de­spite U.S. waivers al­low­ing them to restart the trades amid a lack of clar­ity over rules for ship­ping in­sur­ance.

Both coun­tries sus­pended im­ports from Iran be­fore US sanc­tions snapped back Novem­ber 5. If they do not load Jan­uary bar­rels, that would leave them only about two months to load Ira­nian crude to en­sure that any im­ports are de­liv­ered be­fore their 180-day sanc­tions waivers from the U.S. State Depart­ment ex­pire May 4.

Wash­ing­ton ex­pects im­porters in eight coun­tries with “sig­nif­i­cant re­duc­tion ex­emp­tions” to com­plete all Ira­nian oil trans­ac­tions be­fore May 5, ac­cord­ing to a U.S. gov­ern­ment of­fi­cial who spoke on con­di­tion of anonymity. The of­fi­cial de­clined to say whether the U.S. would con­sider ad­di­tional ex­emp­tions cover­ing May-Novem­ber 2019.

“If some­one takes de­liv­ery or pays for Ira­nian crude oil when they do not have an ac­tive SRE, that trans­ac­tion would be sanc­tion­able,” the U.S. of­fi­cial said.

Iran ex­ported an es­ti­mated 1 mil­lion b/d of oil in Novem­ber, down from 2.4 mil­lion b/d ear­lier this year, ac­cord­ing to S&P Global Platts An­a­lyt­ics, which ex­pects ex­ports to rise to an av­er­age of 1.4 mil­lion b/d over De­cem­ber-April as the eight im­porters work through con­tract and lo­gis­ti­cal lags from the waivers.

At least two Ja­panese re­fin­ers let a Jan­uary-load­ing nom­i­na­tion dead­line for Na­tional Ira­nian Oil Co pass with­out nom­i­nat­ing any bar­rels, sources fa­mil­iar with the mat­ter told S&P Global Platts on con­di­tion of anonymity. They said they are keep­ing their op­tions to re­sume load­ings as soon as pos­si­ble. An­other Ja­panese re­finer is also look­ing at se­cur­ing al­ter­na­tive sup­plies to Ira­nian oil mainly from other Mid­dle East­ern sup­pli­ers as well as from else­where for Jan­uary load­ings, said a source fa­mil­iar with the mat­ter, while de­clin­ing to elab­o­rate whether it has nom­i­nated for Ira­nian sup­plies.

In South Korea, SK In­no­va­tion, a ma­jor buyer of Iran’s South Pars con­den­sate, said it was mak­ing best ef­forts to re­sume im­ports for Jan­uary de­liv­ery.

“We hope in­sur­ances and other con­cerns would be ad­dressed soon so that we can bring Ira­nian car­goes in Jan­uary,” a com­pany of­fi­cial said.

But other South Korean im­porters of Ira­nian oil are not rush­ing to re­sume South Pars con­den­sate im­ports from Iran amid com­pet­i­tive avail­abil­ity of naph­tha as an al­ter­na­tive sup­ply.

“We have im­ported con­den­sate for pro­duc­ing naph­tha for feed­stock, so we can di­rectly pur­chase naph­tha if we face hur­dles se­cur­ing vol­umes from Iran,” said an of­fi­cial with Han­wha To­tal Petro­chem­i­cals, South Korea’s big­gest im­porter of Iran’s South Pars con­den­sate.

De­spite the dif­fer­ence in means of trans­port­ing Ira­nian oil and the use of ship­ping in­sur­ance cov­er­age used by Ja­panese and South Korean com­pa­nies, sources fa­mil­iar with the mat­ter con­firmed that both have a com­mon con­cern; to clar­ify re­cent re­ported ad­vice from the US Trea­sury depart­ment’s Of­fice of For­eign As­sets Control on Ira­nian oil ship­ping. In Ja­pan, re­fin­ers use their reg­is­tered VLCCs and gov­ern­ment-backed ship­ping in­sur­ance for pro­tec­tion and in­dem­nity cover, as well as us­ing cargo and hull in­sur­ance from Ja­panese non­life in­sur­ers for Ira­nian oil im­ports.

Ja­panese re­fin­ers, ship­ping and in­sur­ance com­pa­nies are now con­cerned that their full-set of in­sur­ance for Ira­nian oil ship­ping might be in­com­plete as their cargo and hull cover were not part of the cur­rent sovereign guar­an­tee, sources fa­mil­iar with the mat­ter said.

The Ja­panese gov­ern­ment is cur­rently seek­ing of­fi­cial clar­i­fi­ca­tions from OFAC over the re­ported need for a sovereign guar­an­tee for Ira­nian oil ship­ping, a gov­ern­ment source said.

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