Japan to reduce dependence on Iran oil imports

Deal in Japan

Japan said Thursday it will cut imports of Iranian oil, marking a victory for US diplomatic efforts to pressure Tehran into giving up its nuclear programme after Washington's knockback from China.
The pledge was made during a visit by US Treasury Secretary Timothy Geithner, who came to Tokyo after receiving short shrift from Beijing for the campaign to smother Iran's vital oil exports and head off its atomic drive.
"In the past five years, we have reduced... the amount of oil imported (from Iran)," Finance Minister Jun Azumi said during a joint news conference with Geithner.
"We wish to take planned and concrete steps to further reduce this share, which now stands at 10 percent."
Geithner came away empty handed from Beijing, which refused to bow to US pressure to add its economic might in the campaign to isolate Iran.
However, the US moves have gained traction in the West, with the EU looking to add its not inconsiderable weight.
Denmark, which holds the EU presidency, said Wednesday it was confident European sanctions would be finalised later this month.
The EU decided in principle at the beginning of the month to introduce an oil embargo against Iran, but numerous details remain unresolved.
Europe is collectively the second-biggest destination for Iranian oil exports after China, taking in some 450,000 barrels per day, and the countries most dependent on Iranian oil, like Greece, Italy and Spain, want to delay the start of the sanctions while they search for other sources.
Azumi, whose resource-poor country is heavily dependent on Middle East oil and has maintained relations with Iran in the face of pressure to ostracise the country, said the atomic issue needed to be dealt with.
"The nuclear problem is a problem that the world cannot ignore," he said. "In this respect, we fully understand actions taken by the United States."
Iran, which insists its nuclear programme is for exclusively peaceful purposes, has repeatedly said it will not abandon uranium enrichment despite four rounds of UN Security Council sanctions demanding it desist.
Tehran has threatened to block the strategic Strait of Hormuz if sanctions are imposed.
Geithner on Thursday expressed his appreciation for Japan's gesture.
"We are working very closely with Europe and Japan and allies around the world to substantially increase the amount of pressure we bring on Iran.
"We are exploring ways to cut off the central bank from the international financial system, and to reduce the earnings Iran derives from its oil exports."
He said Washington was in the early stages of consulting with allies on how best to isolate Iran.
"We very much appreciate the support Japan has provided, standing with us and the international community in support of this very important strategic objective."
A statement from Prime Minister Yoshihiko Noda's office after a meeting with Geithner later Thursday said the two men shared concerns over the Iranian nuclear issue.
But Noda cautioned if implemented wrongly, US sanctions could have a serious impact on the health of Japan's economy and that of the world.
The statement gave no further details.
The mass circulation Yomiuri Shimbun reported Thursday that Tokyo's move was an effort to persuade the US to exempt Japanese banks from sanctions.
The paper did not offer any figures on the reduction, but said in exchange for telling oil importers to change suppliers, Tokyo will ask the United States to allow Japanese banks to continue dealing with Iranian authorities.
Under Washington's measures, foreign firms will have to choose between doing business with the Islamic republic or the United States. Japanese megabanks would be badly hurt if they are hit with sanctions.
The Japanese government believes it would be difficult to impose a total ban on Iranian oil imports, the Yomiuri said.
Foreign Minister Koichiro Gemba is currently on an eight-day trip to Turkey, Saudi Arabia, Qatar and the United Arab Emirates for talks expected to focus on the Iranian oil problem.
The pressure from Washington and the European Union to boycott Iranian crude comes at a time when Japan must make greater use of thermal power plants after a massive earthquake and tsunami sparked a nuclear power crisis last March.
The vast bulk of Japan's 54 nuclear reactors are now shut down, amid public distrust of the technology and increased safety calls.