December 15, 2016 / 7:41 AM / 2 years ago

Japan's JX will not seek alternative oil to offset producer cuts

TOKYO, Dec 15 (Reuters) - JX Holdings, Japan’s top oil refiner, is not seeking alternative crude oil to offset supply cuts by global producers, its top official said on Thursday.

The Organization of the Petroleum Exporting Countries (OPEC) agreed on Nov. 30 to cut output by 1.2 million barrels per day (bpd) to 32.5 million bpd for the first six months of 2017, together with another 558,000 bpd in cuts from non-OPEC producers including Russia, Oman and Mexico.

“We have received notices from some oil producers to reduce supplies slightly from the usual volumes starting from January loading,” Yasushi Kimura, chairman of JX Holdings, said during his monthly news conference as president of the Petroleum Association of Japan (PAJ).

“It is true that our firm has received the cuts. We are not considering procuring alternatives immediately. We are not facing problems in procuring crude oil that would satisfy demand.”

Kimura declined to comment on details of the cuts, but a JX official familiar with the matter who declined to be identified said that the so-called “operational tolerance”, which allows buyers to adjust loading volumes under long-term contracts, would offset the supply cuts.

JX has 1.43 million bpd of crude refining capacity, or 37.6 percent of Japan’s total.

OPEC kingpin Saudi Arabia has told its U.S. and European customers it will reduce oil deliveries from January, while sources at eight refiners in Asia told Reuters they had been notified by state-owned Saudi Aramco that in January it was set to supply full crude amounts.

Abu Dhabi National Oil Company on Tuesday said it will cut crude supplies to long-term buyers between 3 percent and 5 percent across its three export grades. Kuwait Petroleum Corp and non-OPEC member Oman would implement its share of the reduction. (Reporting by Osamu Tsukimori; Editing by Christian Schmollinger)

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