Japan is seeking an early exemption from the U.S. on its sanctions against Iran as among the highest priority for the country's energy security as well as local refiners' need for Iranian oil, a top government official told S&P Global Platts Tuesday.

Asked if Tokyo seeks to secure the exemption by November 4, "it would be the sooner the better to get it," he said.

"We have a request from the U.S. to suspend oil imports from Iran but we see Iran as an extremely important country for ensuring Japan's energy security," said Minami, who took the helm of METI's natural resources and fuel department on July 13 after having previously been director for the ministry's oil and gas division over December 2012-July 2015.
Minami said stopping all Iranian oil exports could result in the loss of around 2.5 million b/d of global oil supply, which cannot be absorbed and would trigger a "substantial rise" in oil prices that would not benefit anyone.

"As [Japan] considers to continue importing the crude oil, we intend to tell the U.S. this stance, and we aim to secure their understanding," he said.
While noting Japan's reduction in Iranian oil imports in recent years, Minami added that Japan should be exempt from the U.S. sanction.

Early decision

Japan imported an average of 165,481 b/d of Iranian oil in fiscal 2017-18 (April-March), down 28 percent from the previous fiscal year. Iranian imports accounted for 5.2 percent of Japan's total crude imports of 3.19 million b/d in the fiscal year ended March 31, according to METI data.

Minami's comments came after Petroleum Association of Japan President Takashi Tsukioka said Thursday Japanese refiners have urged the government to seek a U.S waiver on Iran sanctions with hopes of continuing oil imports at current volumes instead of reducing inflows.

"Certainly we have requests from Japanese companies to negotiate with the U.S. [over Iranian oil imports]," Minami said. "For that sense, this issue has elements of [energy security] policy and the impact on Japanese businesses."

Speaking at a news conference Thursday, Tsukioka called for the Japanese government to make an "earliest possible decision" over its response to the U.S sanctions on Iran as refiners are making their preparations for lifting of Iranian oil based on various scenarios.

Asked if Japanese refiners face difficulty continuing to import Iranian oil if the government makes no decision in August, Tsukioka confirmed that the refiners would "temporarily" face it, adding that it would be "inevitable to have some impact" on their procurements.

Even in the event of seeing refiners' "temporary response" over the lifting of Iranian oil, the refiners intend to request the government to continue imports, Tsukioka said.

(Source: Platts)