Talks With Cosmo Oil to Build Cooperation

Cosmo Oil is Japan’s third biggest refiner.Cosmo Oil is Japan’s third biggest refiner.

Japanese refiner Cosmo Oil Company plans to resume activities in Iran’s refining industry as the country faces no restrictions in doing business in Iran following the removal of international sanctions in January.

According to Mehr News Agency, a high-ranking delegation of Cosmo Oil held a special training course on oil refining this week for the staff of Esfahan Oil Refining Company. The report did not provide details.

Established in 1986, Cosmo Oil Company is Japan’s third biggest refiner after JX Holdings and Idemitsu Kosan and owns three refineries in Japan. In addition, it is involved in import, export and storage of crude oil and petroleum products.

Cosmo Oil and the Iranian refiner have also held talks on expanding cooperation in the months ahead but are reportedly far from finalizing a contract.

After the removal of sanctions against Iran’s banking and energy sectors, Japanese oil companies have been among the firms eager to resume collaboration with the refining industry, which has led to the signing of several memoranda of understanding in the past eight months.

To lower mazut output in Bandar Abbas Oil Refinery in the southern Hormozgan Province, Iran has held negotiations with two Japanese companies, namely Marubeni and Chiyoda, signing a preliminary agreement.

Negotiations are underway with JX Nippon Oil & Energy Company to implement Tabriz Refinery’s mazut reduction initiative, Saeed Mahjoubi, director of coordination and supervision for the National Iranian Oil Refining and Distribution Company said in June.

  Improving Energy Efficiency

He said that a Japanese company has signed an MoU to study plans for reducing mazut production in Tehran Oil Refinery and improving energy efficiency in Abadan Refinery, Shana reported.

The official did not name the company. However, some reports say the firm is JGC Corporation -- a prominent industrial company in Japan that has executed major energy projects in Iran in the past.

“The Japanese company is working on plans to raise the quality of Iran's petroleum products to match Euro-4 emission standards," Mahjoubi added.

Iran's aging refineries produce a huge amount of mazut due to largely dilapidated infrastructure and aging technology. Mazut is a low-value and more polluting fuel compared to other fuels such as diesel and natural gas.

The Iranian government is pursuing a two-pronged policy in dealing with mazut: minimizing output and converting the fuel into products with higher value-added such as gasoline and diesel.

According to reports, Iran's share in Japan's oil market stood at 5% in May, but plans call for raising the share to 10%, that is 350,000 bpd.

Japan, one of the main customers of Iranian crude in Asia, has made known its intention to increase imports from Iran.

Saudi Arabia, OPEC's top exporter, has the biggest share in the Japanese crude market, supplying nearly one-third of the country's demand.