Japanese refiner Idemitsu Kosan said it intends to persuade its founding family, the largest shareholder, to agree to go ahead with a planned merger with another major refiner Showa Shell, stressing that it does not expect any damage to the entity's relationship with Iran and Saudi Arabia.
The remark, made by Idemitsu Kosan executive vice president Daisuke Seki in a news conference on Monday, came in response to one of the family's arguments that the merged entity might be seen as an affiliate to Saudi Arabia, which would be inappropriate for Idemitsu Kosan because of its close relationship with Iran, according to Idemitsu Kosan's released documents, Platts reported.
The family's arguments came after Riyadh severed diplomatic ties with Tehran in early January after increasing political tensions between the Middle East rivals.
In its released documents, Idemitsu Kosan said it has been maintaining "a relationship of trust" with Iran since the Nissho Maru incident in 1953 but said it has already established a "tightly knit relationship" with Saudi Aramco as its "main supplier."
In May 1953, Idemitsu Kosan imported 22,000 kiloliters, or more than 137,000 barrels of Iranian gasoline and gasoil on the Nissho Maru from Iran's Abadan port, during Tehran's dispute with the UK after nationalizing its oil industry.
Saudi Arabia was the top crude supplier to Idemitsu Kosan in the fiscal year to March, when its supplies accounted for roughly 40% of its total imports, compared with Iranian supplies accounting for 1% of its total crude imports due mainly to the company's restrictions on accepting Iranian oil due to the latter's specifications, according to the Idemitsu Kosan documents.
"In the event of business integration, [we expect] to be able to maintain our relationship with the National Iranian Oil Company even if Saudi Aramco remains as a stakeholder in the new consolidated company," the Idemitsu Kosan documents said.
Saudi Arabia's state-owned Saudi Aramco has a 14.96% stake in Showa Shell.
