Azernews.Az

By Nigar Orujova

Japan's crude oil imports from Iran in September fell 36.1 percent from a year earlier, data from the trade ministry showed on Wednesday, as Western sanctions continued to squeeze exports from the Middle Eastern country, Reuters reported.

Japan, the world's third-biggest oil consumer, imported 891,300 kiloliters (186,870 barrels per day) of Iranian crude last month, compared with 1,395,238 kl a year earlier and 497,961 kl in the previous month. (1 kl=6.2898 barrels)

Japan has been decreasing its purchase of Iran's oil under the pressure of the sanctions on Iran since 2011.

The Islamic Republic is under intense financial pressure from US and European trade restrictions imposed over its disputed nuclear program. Iran denies all accusations, saying its nuclear program is of civilian nature.

The bans have led to a sharp drop over the past year in its oil exports, a major source of hard currency earnings and revenues for the government. Iran banned exports of 50 basic goods to preserve essential items on Tuesday as the sanctions bite.

The European Union oil embargo against Iran came into full force on July 1 and also targeted the region's marine insurance sector, which effectively cut off the usual avenues for tanker insurance.

Japan's crude imports from Iran fell by 11.7 percent to 313,000 barrels per day last year. Cutting down 20 percent off that amount would bring the oil imports to less than 250,000 in 2012, according to Reuters.

Being one of the world's biggest oil importers, last year Japan bought almost 9 percent of its crude from Iran and its dependence on fuel imports has increased since the 2011 natural disaster.

Turkey's crude oil imports from Iran also reduced -- in half to 110,308 barrels per day (bpd) in September from August while imports from alternative suppliers were on the rise, official trade data showed on Wednesday, Reuters reported.

Iraq was Turkey's biggest crude supplier in September with imports reaching 115,447 bpd. Saudi Arabia, Russia, Azerbaijan and Libya were among the others.

Turkey's state oil refiner Tupras was unable to insure its own tankers to lift Iranian crude starting from July and had to switch to Iranian-owned oil tankers.

Turkey was granted a waiver on Iranian oil by the United States for 180 days from June 11 after Ankara made an initial 20 percent import cut before the sanctions came into effect.

India, after reducing its crude supplies from Iran this year, has now said it will maintain the current shipment of oil supplies from the west-Asian nation.

While speaking on the sidelines of Petrotech 2012 Conference in New Delhi India's Oil Minister Jaipal Reddy said in mid-October that the country will neither reduce nor increase crude imports from Iran.

Crude imports from Iran are estimated at around 15-15.5 million tons for this year.

Iran, which was India's second biggest oil supplier till 2011, has now taken fourth place in terms of crude supplies -- after Saudi Arabia, Iraq and Kuwait -- due to the US sanctions on the oil-rich nation.

According to analysts, for a country like India energy security for the economy is critical as the rising energy demand is increasing tremendously with growing population.

Defying the unilateral sanctions against Tehran, India recently approved insurance cover for ships carrying crude supplies from Iran.

Meanwhile, South Korea is set to resume Iranian oil imports in October after crude cargoes were halted by EU sanctions in the previous two months, with shipments transported under Iranian insurance cover to avoid sanctions targeting Tehran's nuclear program, Reuters reported.

The north Asian country's overall crude oil imports fell 2.8 percent in September from a year ago to 78.36 million barrels, or 2.6 million barrels per day (bpd), data from the state-run Korea National Oil Corp showed on October 22.

The world's fifth-largest importer of crude oil, and one of Iran's biggest oil customers, imported 38.77 million barrels of crude oil from Iran in the first nine months of this year, down 41.3 percent year on year, KNOC said.

South Korean refiners resumed imports of Iranian crude oil for October arrivals, with imports seen at about 6 million barrels per month, or 200,000 bpd, representing a return to full contracted volumes.

Iran is slipping down the ranks of the world's oil producers, having been overtaken by Iraq as the second-largest producer in the Organization of the Petroleum Exporting Countries behind Saudi Arabia earlier this year.

Oil and oil production revenues make up about a half of the Iranian annual budget, which is $5.660 trillion rials (about $449 billion based on the official USD rate in Iran).

Seyed Shamseddin Hosseini, Iranian Minister of Economic Affairs and Finance, announced on October 25 that Iran is planning to fight the sanctions, imposed on Iranian oil incomes by the Western countries. He said oil revenues cut could be compensated by tax, IRIB reported.

Iranian Oil Minister Rostam Qasemi said Iran will shut down its oil exports if the West intensifies sanctions against the Islamic Republic.

According to the latest report of the International Energy Agency, published on October 12, Iran's crude oil exports and output stood at 860,000 barrels and 2.63 million barrels per day respectively in September, compared to 2.4 million barrels of oil exports and output of 3.68 million barrels per day last year.

Thus, Iran lost about two-thirds of oil export revenues during the current year, which constituted $114.76 billion in 2011. Last year, Iran's total exports amounted to $130.54 billion , which means the bulk of Iran's export income is made up by petroleum and oil production revenues.

According to OPEC statistics, in 2011, Iran's daily oil refining capacity was only 1.772 million barrels, and in case Iran cuts oil crude export, it will reduce oil output to 858,000 barrels per day. This means Iran should shut down some of its oil fields and close the wells, analysts say.

Regarding the fact that almost 80 percent of Iran's oil fields are in their second half-life, cutting oil extraction may lead to their grinding to a halt and recomissioning of shut wells would be very difficult. This decision would seriously damage Iran's oil industry.