SEOUL: South Korea has turned to alternative sources to replace its oil imports from Iran, which were halted in May when waivers on US sanctions against the Islamic republic expired, officials told Arab News on Sunday.
South Korea is the world’s fifth-largest crude oil importer, and was one of the countries granted a waiver by the US when President Donald Trump’s administration re-imposed sanctions on Iran last November.
Customs data shows South Korea’s imports of Iranian crude for January through May were 3.87 million tonnes, or 187,179 barrels per day (bpd), compared to 5.45 million tonnes over the same period last year.
South Korea is the biggest buyer of Iranian condensate, an ultra-light oil that is low in sulfur and produces no residue, and is used as a raw material for the manufacture of petrochemicals. Iranian condensate is also cheaper than condensate from other countries, such as Qatar, and provides a higher yield of heavy naptha — , a raw material for the production of petrochemicals including paraxylene, which is used the manufacture of plastic bottles.
SK Incheon Petrochem, Hyundai Oilbank and Hanwha Total Petrochemical have turned to other countries, including Qatar and Russia, to replace Iranian condensate, according to industry sources.
Last year, South Korea bought and tested as many as 23 different types of condensate from 15 countries as possible substitutes for condensate from Iran, at a cost of around $9 billion, government and trade data
South Korean petrochemical makers bought condensate from gas fields in Africa and Europe, in addition to tapping more supplies from Qatar, Saudi Arabia, the US and Australia.
“We’ve increased imports of condensate from Qatar, Australia and Russia,” an employee of Hanwha Total Petrochemical told Arab News, on condition of anonymity. “We also started buying oil from the Republic of Equatorial Guinea.”
The refiner has also raised its imports of heavy naphtha in the absence of Iranian condensate, he added.
According to customs data, South Korea’s Qatari crude oil imports rose 10.1 percent year-on-year to 660,752 tonnes, or 155,596 bpd in May, while oil shipments from Saudi Arabia rose 5.1 percent to 3.39 million tonnes, or 798,695 bpd. Meanwhile, imports of crude oil from the US more than tripled.
In an effort to help local refiners find alternative oil supplies, the South Korean government plans to extend freight rebates for shipments of non-Middle East crude to the end of 2021, according to the Ministry of Trade, Industry and Energy.