UPDATE 2-Japan Sept oil product sales up 7.3 pct y/y -METI

Published 10/29/2010, 08:43 AM
Updated 10/29/2010, 08:48 AM
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*Russian crude triples y/y, Iran crude recovers from Aug

*Sales of gasoline up 6.3 percent, B- C-fuel up 55.2 percent

*Unusually warm weather spurs air-conditioning demand

(Adds crude import data and comments in para 2-9)

By Risa Maeda

TOKYO, Oct 29 (Reuters) - Japan's total oil product sales rose 7.3 percent in September from a year earlier, government data showed on Friday, marking the third straight month of gains due mainly to the positive effect of a prolonged heat wave.

Monthly data by the Ministry of Economy, Trade and Industry (METI) also showed that Japan, the world's No.3 oil-consuming country, tripled its crude oil imports from Russia in September from the same month a year earlier.

Russia exported 1.56 million kiloliters (0.32 million barrels per day) to Japan last month, ranking as its fourth-biggest supplier for a second month in a row.

The fourth spot is its highest ranking since the country across the Sea of Japan started selling its new ESPO Blend crude from the Far East port of Kozmino in late 2009.

Russian oil accounted for 9.5 percent of the total imports.

Iran was the third-biggest supplier, with crude exports up 17 percent from a year earlier at 1.75 million kl. Japan's imports from Iran recovered from 1.42 million kl in August but were down a hefty 31 percent from a year earlier.

There are concerns over higher prices for crude of Iran origin than for its rivals. Earlier this month, Inpex Corp, Japan's top oil explorer, said it had pulled out from Iran's Azadegan oil field project after U.S. sanctions against Tehran over its nuclear programme posed a potential threat to the company's business.

Economic sanctions do not apply to crude trade between Iran and Japan but have prompted banks to increase fees for letters of credit for crude imports from Iran, traders said.

"It looks some are considering replacing a part of Iran crude with an alternative in order to avoid the risk (of uncertainty)," said Hidetoshi Shioda, senior analyst at Nikko Cordial Securities.

AIR-CONDITIONING DEMAND

As for domestic demand, gasoline sales rose 6.3 percent from a year earlier and made up almost a third of total fuel consumption of 15.71 million kilolitres last month as warmer weather than average spurred the use of car air-conditioning.

The rise in sales in Japan for the third month in a row came against the backdrop of relatively low levels a year earlier, when a slow recovery from the global financial crisis put a lid on demand from the industrial sector, a METI official said.

Total oil product sales rose year-on-year every month between January and April this year, bucking a well-anticipated trend of lower demand in a mature market.

In September, sales of B- and C-type fuel oil, mainly used by utilities, rose 55.2 percent from a year earlier to 1.66 million kilolitres as utilities nearly tripled their fuel oil consumption to meet an 11.9 percent increase in power generation amid hot weather.

A rise of 16.7 percent in kerosene sales from a year earlier was also attributed to the use of air conditioning at factories and offices.

(Editing by Jane Baird)

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