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Exclusive - South Korea to cut Iran oil imports 20 percent year-on-year for 6 months: sources
December 10, 2012 / 9:34 AM / 5 years ago

Exclusive - South Korea to cut Iran oil imports 20 percent year-on-year for 6 months: sources

SEOUL (Reuters) - South Korean refiners will cut imports of Iranian crude during the six months to May by about a fifth from a year earlier, to avoid sanctions by Washington, government and industry sources told Reuters on Monday.

Last week the United States granted 180-day waivers on Iran sanctions to China, India, South Korea and some other countries after they cut oil purchases from the Islamic Republic.

“The cut in next year’s imports is expected to be by about 20 percent year on year,” an industry source who has direct knowledge of the matter told Reuters.

South Korea gave the assurance on the size of the cuts in talks with the United States following discussions with Korean refiners, the sources said.

Such a cut would imply South Korean imports of about 147,814 bpd over the period to next May, since it imported 184,767 bpd of Iranian crude from December 2011 to May 2012.

Two refiners, SK Energy and Hyundai Oilbank, now import about 200,000 barrels per day of crude from Iran.

South Korea’s crude imports from Iran stood at 146,069 bpd in the first 10 months of this year, following a two-month halt in August and September, figures from state-run Korea National Oil Corp show.

The planned cut was confirmed by two other sources with direct knowledge of the plan, although none of the officials wanted to be identified, due to the sensitivity of the issue.

The cuts would give South Korea an advantage ahead of the next review of the sanctions waiver due in early June, about 180 days from Friday’s move.

A renewal would means banks in the three countries get another reprieve from the threat of being cut off from the U.S. financial system.

The sanctions aim to choke Iran’s oil trade, the main source of the country’s hard currency, and to force the government to curb its nuclear programme. The West says Iran is using the programme to develop nuclear weapons, a claim Tehran denies.

Asian refiners are reluctant to slash purchases beyond the roughly 20 percent cut made this year as many of them operate plants configured to process Iranian crude. Extending the switch to different grades will be a technical challenge for some and incurs costs.

Seoul also told Washington it would “significantly reduce” imports of Iranian liquefied petroleum gas (LPG) next year, one government source said.

Reporting by Meeyoung Cho; Editing by Clarence Fernandez

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