South Korea steps up US oil, gas buys as Mideast supplies tighten

Record US crude oil and LNG volumes flowed into South Korea last year while supplies from the Middle East were tightened amid OPEC-led output cuts and US sanctions on Iran. Above, Daewoo’s operations on Geoje Island. (Reuters)
Updated 30 January 2019
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South Korea steps up US oil, gas buys as Mideast supplies tighten

  • South Korea is expected in January and February to import at least 18 million barrels of crude oil and 900,000 tons of liquefied natural gas (LNG) from the US
  • The jump in South Korea’s US oil and gas imports comes as US President Donald Trump continues to push to reduce trade deficits with major US trading partners

SEOUL: South Korea’s purchases of US oil and gas this year will hold to the rapid pace set in 2018, narrowing its trade surplus with the world’s top economy further and bolstering its ties to Washington.
South Korea is expected in January and February to import at least 18 million barrels of crude oil and 900,000 tons of liquefied natural gas (LNG) from the US, according to Refinitiv Eikon.
That is a four-fold increase on oil from a year earlier and a slight drop on LNG, indicating the record US crude and LNG volumes heading into South Korea in 2018 are set to continue, supported by favorable market conditions brought about by rising US oil and gas output.
The jump in South Korea’s US oil and gas imports comes as US President Donald Trump continues to push to reduce trade deficits with major US trading partners. US oil and LNG exports are a key part of this strategy.
“At the moment, the trend (of importing US crude) will stay. The economics for US crude is a little bit better than Middle East and North Sea oil,” said a South Korean refining source who declined to be named due to company policy.
Record US crude oil and LNG volumes flowed into South Korea in 2018, while supplies from the Middle East were tightened amid OPEC-led output cuts and a reimposition of US sanctions on Iran.
The US was South Korea’s sixth-biggest crude supplier last year, its highest ranking ever as it overtook Iran and Russia. It also became South Korea’s third-largest LNG supplier, while South Korea was the top importer of US LNG.
South Korea’s US oil and gas imports more than quadrupled in value to $6.75 billion in 2018 from $1.5 billion in 2017, according to the country’s customs data.
The US oil import value of $4.5 billion alone was more than six times the $725 million taken in US oil in 2017.
“Buying more US oil and gas was part of (Seoul’s) strategy as our wide trade surplus against the US was grounds for revising the Korea-US free trade deal,” said Je Hyun-jung, director at the Korea International Trade Association.
South Korea’s 2018 trade surplus with the US at $13.86 billion was the lowest since 2011, down 22.4 percent from $17.86 billion a year earlier, the customs data showed.
In 2017, Trump threatened to renegotiate or scrap what he called a “horrible” bilateral trade deal that had doubled the US trade deficit with South Korea since 2012.
The two countries agreed to revise the deal last year, with Seoul capping its steel exports to the US to avoid hefty tariffs and giving greater market access to US carmakers. The revision took effect on Jan. 1.
Tilak Doshi, a Singapore-based analyst at consultancy Muse, Stancil & Co, said that improving trade ties between South Korea and the US will also support their shared goal of North Korea’s denuclearization.
South Korea imports almost all of its energy. It is the world’s fifth-largest crude and third-largest LNG importer, typically taking 80 percent of its oil and more than 40 percent of its LNG from the Middle East.
However, in 2018, as US oil flows grew, the Middle East’s share of South Korean crude imports dropped to 73.5 percent, the lowest since 2002.
While it is not certain freight rebates for non-Middle East crude imports — part of South Korea’s diversification push — will continue, higher US crude output and wider discounts for West Texas Intermediate (WTI) will make US oil attractive to South Korean buyers looking for cheaper sources outside their traditional suppliers.
GS Caltex, South Korea’s No. 2 refiner, bought 10 million barrels of US crude, mainly WTI Midland and Mars, for arrival over January-February, said a company spokesman, as US oil has became more price competitive.
South Korea’s hunt for condensate to replace Iranian supplies is also expected to intensify later this year as waivers from US sanctions start to expire in May.


Apple’s Cook to China: keep opening for sake of global economy

Updated 23 March 2019
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Apple’s Cook to China: keep opening for sake of global economy

  • Cook’s comments come as Apple weathers sinking sales in China
  • Despite official pledges and repeated assurances that China would continue to open its markets

BEIJING: Apple chief executive Tim Cook nudged China on Saturday to open up and said the future would depend on global collaboration, as the United States and China remained locked in a bitter trade dispute.
“We encourage China to continue to open up, we see that as essential, not only for China to reach its full potential, but for the global economy to thrive,” Cook said at a China Development Forum in Beijing.
Despite official pledges and repeated assurances that China would continue to open its markets, some analysts worry that its reform project has slowed or even stalled under President Xi Jinping, who has sought greater control over the economy and a bigger role for state-owned firms at the expense of the private sector.
Cook’s comments come as Apple weathers sinking sales in China because of a contracting smartphone market, increasing pressure from Chinese rivals, and slowing upgrade cycles. The company reported a revenue drop of 26 percent in the greater China region during the quarter ending in December.
Before those results came out, in a January letter to investors, Cook blamed the company’s poor China performance on trade tension between the United States and China, suggesting that pressure on the economy was hurting sales in China.