Exclusive: Malaysia to halt Iranian oil imports from April ...

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KUALA LUMPUR/SINGAPORE (Reuters) - Malaysia's state oil firm Petronas will halt all imports of Iranian crude from April, two months before a U.S. embargo takes effect, joining a growing list of buyers bowing to Western pressure to isolate Iran, Petronas sources said on Friday.

China, India, Japan and South Korea are the four biggest buyers of Iranian crude in Asia and all are cutting imports. Iran sells most of its 2.6 million barrels per day (bpd) of exports in the region.

"We are complying and aim to cut all our imports from Iran by April," said a senior Petronas PETR.UL official with direct knowledge of the issue. "We are looking at alternative sources."

A Petronas spokesman was unavailable for comment.

Petronas imports some 50,000-60,000 bpd of Iranian crude, the sources said, making it a mid-sized Asian buyer compared with top Iranian oil importers such as China's Zhuhai Zhenrong and Unipec which buy more than 200,000 bpd each.

Petronas buys Iranian crude via at least two annual term contracts, and one of those will not be renewed when it expires in March, the sources said.

Malaysia imports 350,000-400,000 bpd of crude oil and oil products and those volumes are set to rise as the economy expands, industry sources say.

Petronas has been very cautious about doing business with Iran due to sanctions, which have increased over the years. It also wants to safeguard its U.S. business exposure, according to Petronas and industry sources.

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Iran sanctions graphic: link.reuters.com/duf27s

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UNDER PRESSURE

Iran's crude customers are under pressure from the United States to reduce imports significantly to avoid sanctions that will be imposed from the end of June.

EU sanctions have also made buying Iranian crude more difficult as they penalize insurers for indemnifying Iranian crude cargoes anywhere in the world.

The sanctions are intended to punish Iran for its controversial nuclear program, which the West believes is being used to develop weapons but which Iran says is for peaceful purposes.

Most of Petronas' imports of Iranian crude went to the 135,000 bpd Engen refinery in South Africa, in which Petronas holds a majority stake.

South Africa has already suspended almost all its oil imports from Iran, a senior diplomat said on Thursday, and the Petronas source said that Engen had also stopped buying any Iranian crude from March.

Another 10,000-11,000 bpd of Iranian crude were channeled to Petronas' 180,000 bpd Malacca refinery in Malaysia, one source said. Petronas holds a 53 percent stake in the plant, with the rest owned by U.S. firm ConocoPhillips (COP.N).

Petronas has bought spot Middle East crude cargoes to replace the Iranian crude for its Malacca refinery. It also purchased Angolan and Middle Eastern grades for the South African refinery, the source said.

Petronas also recently renewed a term contract to buy up to two 730,000-barrel cargoes of Russian ESPO Blend crude each month from TNK-BP (TNBP.MM) for two years.

(Editing by Simon Webb and Miral Fahmy)

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