Korea’s Iranian oil imports to continue

May 30, 2012 - 15:43
The United States will give South Korea a waiver and allow it to continue importing crude oil from Iran, without being subject to sanctions, the foreign ministry said Wednesday.
A ministry official said a formal announcement will be made later this week. 
He said Korea and the U.S. completed their consultations and are now fine-tuning the details. Korea is the fourth largest Iranian oil importer. 
It accounts for around 10 percent of Korea’s crude imports.
“Washington is likely to announce Korea’s waiver from U.S. sanctions on Iran within this week,” said the official. “Washington has already agreed to Korea’s request for an exemption.”
Together with Seoul, around a dozen countries are expected to get a waiver.
Seoul has been exerting efforts to be excluded from the U.S. sanctions list on Iran. Washington earlier decided to impose financial sanctions on countries that import Iranian oil beginning June 28 based on the National Defense Authorization Act. 
The official said Seoul was able to get the waiver as domestic refiners that import oil from Iran ? SK Innovation and Hyundai Oilbank ? voluntarily cut its reliance on Iranian oil.
For the same reason, 11 other countries including Japan, Germany and the United Kingdom were exempted in March.
Ninety percent of Asian nations’ oil shipment insurance is financed by European companies. If imposed, domestic refiners that import Iranian oil are likely to suffer deep cuts in profit.
According to Moody’s Investor Service, a U.S.-based credit rating agency, Korea’s possible cut in imports of Iranian oil could result in a rise of the cost of SK Innovation and Hyundai Oil Bank’s oil imports by 0.3 to 0.5 percent and 0.4 to 0.9 percent, respectively.
South Korea imported almost 60 percent more crude from Iran in April than in March, pushing purchases to their highest level this year and reversing a decline that began in January after the United States announced sanctions against Tehran.
At more than 7.5 million barrels, April’s imports were the highest since November 2011, and were also 42 percent more than the same month a year ago, data from the state-run Korea National Oil Corp. (KNOC) showed on Tuesday.
In March, imports were down 40 percent on the year.
Government officials and industry sources declined to comment on the rise in imports, saying the issue was politically sensitive. April’s imports bucked a downtrend that had decreased cumulative crude imports from Iran since the beginning of the year by 10 percent versus the same period a year ago.
South Korea is seeking a waiver from U.S. financial sanctions against Iran that were announced on Dec. 31 and which take effect end-June, but Washington has said exemptions will be granted only to countries that make big cuts to their crude imports.
South Korea’s government has shied away from officially declaring a position on whether it will stop or reduce its Iranian oil imports.   
Iran’s oil exports, which were up to 2.2 million barrels per days (bpd) last year, have not dropped this year.
China, the world’s second biggest oil consumer and another major Asian buyer of Iranian crude, increased its oil imports from Iran by 50 percent in April compared to March after both sides resolved a pricing dispute.
South Korea imported 25.25 million barrels from Iran during the first four months of this year, the KNOC data showed.
The jump in April contrasts sharply with imports in March, which fell 40 percent from a year ago to 155,000 bpd as South Korea slashed Iranian imports and a crude distillation unit was closed for maintenance work.
Seoul imported more than 250,000 bpd of Iranian crude in April, compared with its term import agreement at 200,000 bpd this year.
Of South Korea’s four refiners, only SK Energy and Hyundai Oilbank import Iranian crude. 
The South Korean government, however, is still lobbying the EU to exempt it from the ban.
(Source: koreatimes.co.kr)