Kuala Lumpur/Singapore - Malaysian state oil firm Petronas
will halt all imports of Iranian crude from April, two months before a US
embargo takes effect, joining a growing list of buyers bowing to Western
pressure to isolate Iran.
China, India, Japan and South Korea are the four biggest
buyers of Iranian crude in Asia and all are cutting imports. Iran sells most of
its 2.6 million barrels per day (bpd) of exports in the region.
Petronas sources said on Friday the company was already
looking at other suppliers.
“We are complying and aim to cut all our imports from Iran
by April,” said a senior Petronas official with direct knowledge of the issue.
“We are looking at alternative sources.”
A Petronas spokesperson was unavailable for comment.
Petronas imports some 50 000-60 000 bpd of Iranian crude,
the sources said, making it a mid-sized Asian buyer compared with top Iranian
oil importers such as China’s Zhuhai Zhenrong and Unipec which buy more than
200 000 bpd each.
Petronas buys Iranian crude via at least two annual term
contracts, and one of those will not be renewed when it expires in March, the
Malaysia imports 350 000-400 000 bpd of crude oil and oil
products and those volumes are set to rise as the economy expands, industry
Petronas has been cautious about doing business with
Iran due to sanctions, which have increased over the years. It also wants to
safeguard its US business exposure, Petronas and industry sources say.
Iran’s crude customers are under pressure from the United
States to reduce imports significantly to avoid sanctions that will be imposed
from the end of June.
EU sanctions have also made buying Iranian crude more
difficult as it penalises insurers for indemnifying Iranian crude cargoes
anywhere in the world.
The sanctions are intended to punish Iran for its
controversial nuclear programme, which the West believes is being used to
develop weapons but which Iran says is for peaceful purposes.
Elsewhere in Asia, major buyers are cutting back their
purchases of Iran’s crude.
Indian Oil Minister Jaipal Reddy told reporters on Friday
his country will continue to import oil from Iran without violating any
However, while publicly disdainful of unilateral sanctions
against Iran, India is privately pushing its refineries to cut back imports
from the Opec producer.
Japan has been granted a waiver from the US sanctions
after cutting its Iran oil imports by 15-22% in the second half of last
China, Iran’s top trade partner and crude buyer, slashed
imports by more than half in the first quarter as its largest refiner, Sinopec,
negotiated long-term supplies. South Korea cut Iran imports by 15% in
January and February combined.
Among small buyers, Taiwan state-run refinery CPC will halt
Iran imports from July, a company source said. Sri Lanka, which relies on Iran
crude for 90% of its needs, has signed a deal to buy Oman crude as it
works to reduce its reliance on Tehran.
The tightening sanctions have raised concerns among oil
importers that they might not find replacement barrels or that world supply
will fall and push prices even higher.
The head of the International Energy Agency tried to soothe
“There is no fear of disruption of supplies and you know
Saudi Arabia is going to bring more oil to the market,” IEA executive director
Maria van der Hoeven said on a trip to India. She did not make a direct
reference to Iran.
Most of Petronas’ purchases of Iranian crude were for the
135 000 bpd Engen refinery in South Africa, in which Petronas holds a majority
South Africa has already suspended almost all of its oil
imports from Iran, a senior diplomat said on Thursday. The Petronas source said
Engen had stopped buying any Iranian crude from March.
Another 10 000-11 000 bpd of Iranian crude were channelled
to Petronas’ 180 000 bpd Malacca refinery in Malaysia, a source said. Petronas
holds a 53% stake in the plant, with the rest owned by US firm
Petronas has bought Middle East crude cargoes from the spot
market to replace the Iranian crude for its Malacca refinery. It also purchased
Angolan and Middle Eastern grades for the South African refinery, the source
Petronas also recently renewed a term contract to buy up to
two 730 000-barrel cargoes of Russian ESPO Blend crude each month from TNK-BP
for two years.