South Korean refiners will resume imports of up to 200,000 barrels per day of Iranian crude from September, economy ministry sources said on Monday, ending a two-month gap due to a European Union ban on insurance cover for Iranian oil.
The resumption is unlikely to hinder South Korea’s bid to extend a U.S. sanction waiver later this year as imports in 2012, which were down 17 percent in the first half, will still be almost 20 percent lower than last year.
“The imports will resume from early September loading, meaning late September arrival,” said a source at the economy ministry who has direct knowledge of the matter but declined to be identified as he was not authorized to speak to media.
“The oil will be loaded in Iran to be shipped by Iranian tankers under Iranian insurance cover,” the source said.
Japan and South Korea, Iran’s third- and fourth-biggest oil buyers, both halted imports in July as they scrambled to work out how to continue imports under the EU sanctions, which have made it tough to ship, insure and pay for Iranian oil.
Like their Chinese and Indian counterparts, Korean refiners have asked Iran to deliver crude on Iranian tankers, government and industry sources said this month. This shifts the responsibility to Iran for insurance, sidestepping a ban in the EU on insurers covering Iranian shipments.
The United States, European Union, and other Western nations are trying to stop Iran's suspected pursuit of nuclear weapons with toughened sanctions on oil exports, a major source of income for Iran, which says its nuclear program is peaceful.
Sources said Iran’s crude exprts dropped to about 1.1 million barrels per day in June and July from more than 2 million bpd at the start of the year.
Total imports envisaged at resumption will be six million barrels per month, or 200,000 bpd. SK Energy will import four million barrels per month and Hyundai Oilbank will import two million barrels per month, the economy ministry source added.
This is the volume refiners agreed in term contracts with Iran for this year.
“We see little probability that the imports will hinder talks with the United States to extend a sanction waiver as this year’s import volume will be smaller than last year’s,” another source at the economy ministry said.
“There was even a halt due to the EU insurance ban.”
South Korea received in June a waiver for 180 days from U.S. financial sanctions on Iran in return for significantly cutting purchases of Iranian oil.
A spokesman at SK Innovation, which owns SK Energy, told Reuters last Friday that the talks with Iran were progressing well, and the refiner expected to resume the imports around September loading.
Tehran offered to provide up to $1 billion of insurance cover to Iranian vessels shipping oil to South Korea, Reuters reported last month.