Cosmo Oil Co. (5007) reduced the amount of crude it buys from Iran in a contract renewal for the fiscal year started in April, according to two people with direct knowledge of the matter.
The Japanese refiner, partly owned by the government of Abu Dhabi, cut its annual purchase agreement following negotiations this month, the people said, declining to be identified because the terms are confidential. They wouldn’t specify the reduction from about 40,000 barrels a day that Cosmo bought from Iran last year. Katsuhisa Maeda, a spokesman for Cosmo Oil in Tokyo, declined to comment on the contract.
The Obama administration granted exemptions to Japan and 10 European Union nations last month for 180 days from a U.S. law that places sanctions on banks that do business with Iran, including processing of oil payments. The nations showed they are cutting crude purchases from the Persian Gulf producer, the U.S. said.
Cosmo Oil added force majeure clauses to the new contract that allows it to opt out of buying Iranian crude when it can’t obtain sufficient insurance, the people said.
The European Union prohibited the insurance and re- insurance of tankers carrying Iranian crude last month as part of sanctions designed to stop Iran’s nuclear program. The bloc allowed insurance only for third-party liability and environmental-liability until July 1.
Japan cut imports from the Persian Gulf country by 33 percent in February from a year earlier to 1.41 million kiloliters, or about 306,000 barrels a day, according to data compiled by the trade ministry. Shipments from Iran, Japan’s fourth-biggest crude supplier, accounted for 7.9 percent of the country’s total supply in the month, the data showed.
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