* JX to cut 2014 contract volumes by more than 10,000 bpd
* Reduction part of continued cuts to win waivers on U.S.
* Cuts still likely despite signs of progress in U.S.-Iran
By Osamu Tsukimori
TOKYO, Sept 27 Japan's top buyer of Iranian
crude JX Nippon Oil & Energy Corp is set to cut the oil it takes
from the Middle Eastern producer in an annual contract for next
year by nearly 20 percent, an industry source familiar with the
Japan, Iran's third biggest oil client, has been cutting its
purchases sharply since 2012, under pressure from U.S. and EU
sanctions targeting Tehran's nuclear programme. The west says
the programme is a cover to develop weapons; Iran denies this.
JX is braced for the cuts even though Iran has proposed an
agreement to address concerns about its nuclear programme within
a year at talks with major powers.
"JX is set to cut close to 20 percent, or by more than
10,000 bpd," the source told Reuters on condition of anonymity.
JX Nippon, a downstream unit of JX Holdings, is
expected to cut its Iran import volumes to around 60,000 bpd in
2014, down from an estimated 73,000 bpd this year.
That would cost Iran around $390 million next year at
current OPEC basket prices, according to Reuters calculations.
Iran's oil exports have fallen more than 50 percent to less
than 1 million bpd from pre-sanction levels as the U.S. and EU
sanctions have made it difficult to insure tankers carrying the
crude and refineries processing it.
JX declined to comment on any cut in the term volume. JX and
Iran's National Iranian Oil Company (NIOC) are expected to begin
negotiations on the 2014 contract in November, the source added.
Some analysts say there is not much chance that any
diplomatic deal over Iran's nuclear programme would lead to its
oil exports increasing significantly anytime soon.
"Despite the much more benign statements from Tehran this
summer, the path to a lasting diplomatic deal that will lead to
Iranian barrels returning to the market remains quite perilous,
in our view," Barclays analysts said in a note.
CUTS FOLLOW 40 PCT DROP
Japan slashed Iranian imports by almost 40 percent to
189,076 bpd last year. Total oil imports rose 2.7 percent at the
same time, with the lost Iranian imports filled by purchases
from Saud Arabia, Qatar and Kuwait among others.
The United States earlier this month again extended a waiver
on Iran sanctions for six months to Japan in exchange for its
continued reduction in Iran imports.
Japan imported 172,047 bpd of Iranian crude in July, trade
ministry data showed, up 18 percent from June, but with imports
falling 10.7 percent for the January-July period to 183,914 bpd.
Trade ministry data on oil shipments for August is due on
JX until recently had two annual contracts with Iran, one
with a larger volume running from January-December and a smaller
one running over the April-March fiscal period.
The company only renewed the bigger contract this year,
cutting the volume by 10,000 bpd from a year earlier to 73,000
bpd. The second contract, for 10,000 bpd, was allowed to expire
at the end of March 2012 and was not renewed.
Other Japanese buyers of Iranian oil usually sign annual
supply contracts based on the fiscal year, typically starting
talks on renewals around mid-February every year.
Iran's other Japanese customers include Showa Shell Sekiyu
, Cosmo Oil Co and Idemitsu Kosan Co.
(Editing by Tom Hogue)