Saudi Arabia remains South Korea’s top oil supplier after Iran sanctions

South Korea has bought 209,316 barrels of oil for the first eight months of this year. (AFP)
Updated 10 October 2019

Saudi Arabia remains South Korea’s top oil supplier after Iran sanctions

  • In July, Seoul’s crude shipments from the US almost tripled to 14,782 barrels from the year before

SEOUL: Saudi Arabia remains the largest crude supplier for South Korea in the absence of Iranian oil shipments, according to customs data. 

South Korea’s oil imports from Iran were halted after the US re-imposed sanctions against the Islamic republic in May.

The statistics, released by the Korea National Oil Corporation, show that South Korea bought a total of 209,316 barrels for the first eight months of this year, representing a 7.4 percent increase from a year earlier.

The US has seen an increase in its oil supply to South Korea. The data shows South Korea imported 51 percent more crude from the US.

In July, Seoul’s crude shipments from the US, in particular, almost tripled to 14,782 barrels from the year before.

As a result, the US became South Korea’s second-largest crude oil supplier, overtaking Kuwait for the first time. Over the past eight months, South Korea has imported a total of 86,069 barrels, with the price tag of nearly $5.7 billion.

South Korea’s crude imports from Kazakhstan jumped by 39 percent from the previous year, followed by the UAE, Kuwait and Saudi Arabia. Oil imports from the UAE increased by 33.7 percent, and Kuwait by 13.8 percent.

South Korean oil refiners have been struggling to find alternative sources of condensate supply. Previously, the Iranian ultra-light oil was favored most by South Korean refiners as a raw material for making petrochemical products.

Before US sanctions were re-imposed, South Korea was the biggest buyer of Iranian condensate with a rich yield of naphtha. 

Hanwha Total Petrochemical is the first South Korean refiner to diversify its source of condensate out of Iran.

According to the company spokesman, the petrochemical firm has ordered 500,000 barrels of condensate from Saudi Arabia.

“The Saudi Arabian condensate was delivered in August, and this is our efforts to diversify the sources of condensate imports,” the spokesman said, asking not to be named. 

Hanwha Total operates a condensate splitter at its factory in South Chungcheong Province to deal with 180,000 barrels of condensate a day, he added.

Earlier, the company said it would increase imports of condensate from Australia and Russia.

Other refiners such as SK Innovation were not immediately available for comment.

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.


German finance minister plans ‘debt brake’ suspension

Updated 27 February 2020

German finance minister plans ‘debt brake’ suspension

  • Scholz has long backed plans to lift a near-unbearable burden of repayments from 2,500 municipalities by shifting €40 billion ($43.5 billion) of their debts to Berlin

BERLIN: German Finance Minister Olaf Scholz plans to temporarily suspend a government “debt brake” to hand out tens of billions of euros to struggling municipalities, weekly Die Zeit reported on Wednesday.

With years of fat budget surpluses, Germany has long faced calls at home and abroad to loosen its purse strings, but the spread of the novel coronavirus and its likely impact on economic growth have given them new impetus.

“Scholz will present a plan in March,” Die Zeit wrote without citing its sources.

Scholz would need two-thirds majorities in both parliament’s directly elected lower house and the upper house representing the states to suspend the debt brake.

Anchored in the German constitution at the height of the financial crisis in 2009, the rule prevents government from running a deficit of more than 0.35 percent of the gross domestic product in normal times.

Finance Ministry spokeswoman Katja Novak declined to comment on “speculation,” telling AFP “the finance minister will present his proposals for dealing with old debt early this year.”

“At present various options are being discussed,” Novak added.

Scholz has long backed plans to lift a near-unbearable burden of repayments from 2,500 municipalities by shifting €40 billion ($43.5 billion) of their debts to Berlin.

He hopes it would lift a major hurdle to increasing infrastructure spending and eliminating financial and planning bottlenecks in municipalities responsible for projects like roads and schools.

Many of the towns affected are in deindustrializing “rust belt” zones, like Germany’s most populous state North Rhine-Westphalia.

After years of a no-new-debts policy known as the “black zero,” economists and EU partners are increasingly pressuring Berlin to upgrade aging infrastructure and stimulate its flagging economy with new spending.

A manufacturing slowdown in Europe’s top economy and the looming impact of the coronavirus have added urgency to such calls.

What is more, the European Central Bank’s monetary policy is already extremely loose, with negative interest rates and mass bond purchases under a “quantitative easing” scheme.

With little room to maneuver in Frankfurt, eurozone governments are on the hook to stimulate flagging economic growth, especially in case of a potential hefty shock stemming from an unforeseen event like the virus.