TAIPEI (Taiwan News) – Despite being provided a waiver from sanctions for purchases of Iranian oil by the U.S. government early in November, Taiwan’s largest oil conglomerate Taiwan’s CPC Corporation (also called Formosa Petrochemical) announced it will cease oil purchases from Iran.
The state-owned petrochemical company announced the decision on Thursday Nov. 29, in light of being unable to establish a secure payment mechanism for oil purchases.
A spokesman for the CPC Corporation, KY Lin, speaking to Reuters explained the company’s decision.
“There is no payment mechanism, so we will suspend Iranian oil loadings for the time being. So the Iraqi contract is to replace some of the Iranian volume.”
The last purchase of Iranian crude was made in August for two million barrels, and it reached Taiwan in mid-September, according to Reuters.
To replace the imports from Iran, CPC Corp. has reportedly established an agreement with Iraq’s Oil Marketing Company (SOMO) for the purchase of Basra light, beginning in 2019.
“It’s a trial volume to see how smooth operations will be,” said Lin, noting that current supplies from Iraq are limited because SOMO “has become stricter with term buyers on destination restrictions,” Lin said.
CPC Corp. has reportedly made purchases in volumes of two million barrels from SOMO in the past through the spot trade market, but has been reluctant to sign and establish terms for regular deliveries, because of concerns over shipping delays.
Currently, fuel supplies to Taiwan remain steady ahead of what market speculators believe may be a period of oversupply heading into 2019.
On Nov. 25, CPC Corp. announced that it would be reducing the price of gasoline by as much as NT$0.9 (US$0.029) per liter in the first week of December, the largest cost reduction so far this year, reports CNA.