Reuters: South Korea will buy around 10 percent of its crude from Iran in 2012, up slightly from last year, as the country seeks a waiver from toughened U.S. sanctions that could disrupt Iranian oil shipments.
By Cho Mee-young
SEOUL, Jan 4 (Reuters) – South Korea will buy around 10 percent of its crude from Iran in 2012, up slightly from last year, as the country seeks a waiver from toughened U.S. sanctions that could disrupt Iranian oil shipments.
Refiners in the world’s fifth-largest oil importer have struck annual deals to buy 200,000 barrels per day (bpd) of Iranian crude, a little more than the 190,000 bpd in 2011, but are also keeping an eye out for potential replacements.
U.S. President Barack Obama signed into law on Saturday new sanctions that could prevent refiners from paying for Iran’s oil, while the European Union is considering measures that would ban its member countries from importing the crude.
Tehran has warned it could shut the Strait of Hormuz, a shipping chokepoint through which about 35 percent of the world’s oil is shipped, if sanctions were imposed on its crude exports.
South Korea will meet with U.S. officials this quarter to lobby for an exemption to U.S. sanctions to enable it to continue buying and paying for Iran’s oil, government sources said.
Iran, already struggling to repatriate oil payments under previous sanctions targeting financial transactions, has an estimated $5 billion of oil money stuck in accounts in South Korea.
SK Energy will buy the additional crude, taking 130,000 bpd in 2012, up 10,000 bpd on the year, a government source said.
An SK Energy spokesman declined to comment when asked about the deal.
Hyundai Oilbank, the only other South Korean refiner that buys Iranian crude, will import 70,000 bpd in 2012, unchanged from 2011, a Hyundai spokesman said on Wednesday. Neither traders nor spokespeople could give more information on the terms of the deals.
Hyundai is making contingency plans for any disruption in the flow, the spokesman said.
“We are planning for various scenarios, including diversifying supply lines, if the situation changes,” the spokesman said.
If Iran’s oil flow is disrupted, South Korea’s government could consider a release of oil from strategic stockpiles kept to provide a buffer for refiners during emergencies, government sources said.
Top Iranian crude buyer China has yet to agree 2012 oil deals and has cut its imports from Iran by more than half for January as the two haggle over terms.
China has bought crude from Russia, Vietnam, West Africa and Iraq to substitute for the 285,000 bpd it has cut from January Iran supplies.
South Korean refiners would likely look to the same sellers and to top oil exporter Saudi Arabia to meet any supply disruption.
Saudi Arabia is the only oil producer with enough capacity to compensate for the around 2 million bpd of crude that Iran exports.
SK Energy could replace Iranian oil with imports from elsewhere in the Middle East if it needed to, although that might cost more money, an SK Energy source said.