S&P Global Platts - Japanese refiners Idemitsu Kosan, Showa Shell and Cosmo Oil have yet to decide on their Iranian oil imports, following the latest US-Japan talks on Iranian sanctions, while Fuji Oil will consider procuring Iranian crude if Washington extends its sanctions waiver to Tokyo beyond May, company officials told S&P Global Platts Wednesday.

A spokesman for Idemitsu Kosan and Showa Shell, which merged under a share exchange on April 1, said the refiners had yet to decide on their response on Iranian oil imports beyond May. Showa Shell, a major Japanese buyer of Iranian crude, became a wholly owned subsidiary of Idemitsu Kosan as a result of the share exchange.

Fuji Oil, in Showa Shell holds 6.57%, will consider procuring Iranian crude both on a term and spot basis if the US extends its sanctions waiver for Japan, a spokesman said.

The Fuji Oil spokesman added that its consideration of Iranian crude procurement will depend on economics of the barrels and availability of tankers, shipping insurance and the capability of bank transactions.

Fuji Oil, another major Japanese buyer of Iranian crude, will also consider procuring alternative supply both from Latin America and the Middle East if it cannot import barrels from Iran, the spokesman said.

Among possible alternative options for Iranian barrels, Fuji Oil is looking at blending ultra-heavy crude grades from Latin America with light sour grades from the UAE, the spokesman said.

A Cosmo Oil official said the refiner has not decided on its lifting of Iranian crude and will consider its options by closely monitoring the Japanese and US talks on the sanctions.

A spokesman for Japan's largest refiner, JXTG Nippon Oil & Energy, said Wednesday that it will continue to ask the government to secure an extension to the US sanctions waiver as it sees Iran as an important supply source.

JAPAN, US TO CONTINUE TALKS

Japan and the US will continue discussions on Iranian sanctions after the latest round of talks, a Japanese government official said Wednesday, which come after Japanese refiners have already suspended loadings of Iranian oil ahead of the expiry of the country's sanctions waiver in early May.

In the latest talks in Washington Monday, the Japanese side insisted that the US sanctions "should not have a harmful effect on Japan's stable energy supply and its corporate activity," the Japanese government official said.

"Japan and the US will continue close discussions on the issue going forward," the official said, declining to elaborate on future discussions.

Monday's meeting was attended by Hiroshi Oka, Japan's director general/assistant minister for Foreign Affairs for Middle Eastern and African Affairs, and Sandra Oudkirk, US deputy assistant secretary, Bureau of Energy Resources, at the Department of State, along with other officials, including from Japan's Ministry of Economy, Trade and Industry and the US Department of Energy.

At a press briefing in Washington Monday, US Secretary of State Mike Pompeo did not say whether the US was prepared to grant new six-month waivers to Iran's top oil buyers when the current exemptions expire in less than a month. "We'll make that decision in due course as we move toward May 2," Pompeo said.

Japan is one of eight countries that received a 180-day significant exemption from US sanctions on Iran.

In early March, a Japanese buyer loaded what appeared to be the last Iranian oil cargo arriving in Japan ahead of the waiver's expiry amid uncertainty over whether it will be extended beyond May.

The VLCC Kisogawa left Iran's Kharg Island on March 14 after loading Iranian oil and is in Japanese waters for discharge in the coming days, according to Platts trade flow software cFlow. The Kisogawa is under a time charter with refiner Showa Shell, according to a VLCC broker in Japan. The tanker also co-loaded a Qatari oil cargo for Fuji Oil.

Other Japanese buyers of Iranian oil -- Idemitsu Kosan, JXTG Nippon Oil Energy and Cosmo Oil -- have already completed their loadings under the current waiver, according to sources familiar with the matter.

Japan imported 135,013 b/d of Iranian oil in February, marking the first imports in four months, according to METI data.

Iran was the fifth-largest crude supplier to Japan in February, accounting for 4.4% of Japan's total imports of 3.09 million b/d.

February imports of Iranian oil were down 25.1% year on year, while Japan's last imports of Iranian crude prior to February were in October at 48,033 b/d, according to METI data. Iranian Heavy crude accounted for 86.8% of the total Iranian oil imported in February, when Japan also took 249,139 barrels of Soroosh, marking the first imports of the grade since May 2016.