Platts- In a significant deal, a Long Range I tanker has been chartered for delivering a parcel of 55,000 mt of Iranian naphtha to Japan next month, several brokers, owners and charterers said Monday.

A 2009-built, Bahamas-flagged tanker, the 75,000 dwt Gulf Cobalt has been placed on subjects by Mitsui and loading is scheduled in the next two weeks at one of the Iranian ports, shipping industry sources tracking the developments told S&P Global Platts.

Mitsui officials could not be immediately reached for comment but shipping sources tracking the deal said that there is also an option to take the cargo to other parts of North Asia.

The deal is important because if the option to discharge the cargo at one of the Japanese ports is exercised, it will be one of the first LR1 tankers to deliver Iranian naphtha into the country after the sanctions were eased on the Persian Gulf nation last year.

While a few cargoes of Iranian naphtha have been delivered into Japan since October last year, they were mostly on Medium Range tankers, which typically carry cargoes of less than 40,000 mt each, sources said.

LR1s can deliver up to 55,000 mt of cargoes each at Japanese ports.

Sources said the Gulf Cobalt was placed on subjects by Mitsui at Worldscale 120, which was at a slight premium to the freight rates on the Persian Gulf-to-Japan routes. Platts Monday assessed this benchmark LR1 route at w117.5.

"Freight rates for Iran loadings do command a premium but it can vary [widely] depending on the number of suitable ships available at a given point of time," said a Singapore-based executive with a clean oil tankers company.

As the main US financial sanctions against Iran are still in place, shipping companies with direct links to the US financial and stock markets avoid calling at Iranian ports.

Other companies such as those based in Europe, which do load or discharge cargoes at these ports, charge a premium.

As Iran's Persian Gulf Star or PGS refinery ramps up operations at its first 120,000 b/d train, the country's naphtha exports to North Asian countries such as Japan are expected to increase.

Earlier, Showa Denko purchased two MR-size cargoes of Iranian naphtha, one each from Marubeni and Mitsubishi, for use in its plant in Oita, Japan, for delivery in December and February respectively, according to sources with direct knowledge of the matter.

However, sometimes such imports do not get recorded as naphtha in official government data due to technical specifications.

"They may get recorded as either naphtha or condensate," said a Tokyo-based chartering executive with a global commodities trading company.

For around a year now, Iran has already been exporting crude and clean condensate. With these latest naphtha sales, its trading portfolio is growing.

The sales also indicate that getting international insurance cover for the cargoes is no longer as great an issue as it was in the past.

The Middle East and Red Sea region is the largest supplier of naphtha to North Asia, although significant volumes also come in from Europe and smaller quantities from India and the US.

Iranian naphtha will provide stiff competition to sales from other refineries in the Middle East and Red Sea. But the grade and quality will also be crucial if Iran wants to step up the sales, sources said.