Showa Shell may cut Iran oil imports more due price

Showa Shell may cut Iran oil imports more due price

Showa Shell cut imports from Iran by 30pct in 2010-source.

August 9, 2010 2:32 by Reuters

Japan’s Showa Shell Sekiyu cut imports of crude oil from the National Iranian Oil Company (NIOC) by 30 percent this year and may impose a deeper cut if an agreement is not reached on fourth quarter prices, a source familiar with the matter said on Monday.

Iran was pushing for a high prices for its crude as its economy suffered from the new rounds of sanctions imposed by the United Nation and United States in June and July, oil trading sources said.

Showa Shell used to import 100,000 barrels per day (bpd) of crude oil from Iran, but now only imports 70,000 bpd as the NIOC is not is not following international standards of pricing oil, said the source, declining to be named.

“We can not agree on a price, Iran is basically demanding prices that are a dollar higher than crude we get from Saudi Arabia and the United Arab Emirates,” he said.

“They don’t use international known standards to price oil, they use Iranian standards which is why we can’t agree of prices for Q4 and may lead us to cut more of the imports by October or we may even cancel the contacts,” he added.

No one at the NIOC was available to comment.

Showa Shell is one-third owned by Royal Dutch Shell and around 15 percent owned by Saudi Aramco.

Price negotiation meetings were held between Showa Shell and NIOC in Tehran and in Tokyo over the past couple of months, the source said.

“There will be more talks taking place in Beijing this month, which we hope will result in a final decision, otherwise the situation remains critical,” he added.

Showa Shell in Tokyo said contracts with NIOC will not be cancelled, but declined to comment on volumes being imported. “We have renewed our contracts. There is no such move to cancel the contract,” a spokesman from Showa Shell told Reuters.

(Additional reporting by Osamu Tsukimori in Tokyo; Editing by William Hardy)