A South Korean official said Tuesday that media reports this week that suggested South Korea would stop importing crude oil from Iran in the next couple of months regardless of whether cutting off such imports are requested by the U.S. and the European Union "aren't factual."
South Korea is "doing its best" to obtain an exemption from Iran-related U.S. sanctions and to gain access to the EU's insurance services for oil shipments from the Islamic Republic after July 1, when EU sanctions are due to start, said the official, who didn't want to be named.
The U.S. has exempted nearly a dozen countries from sanctions on Iran in return for significant reductions in their imports of Iranian crude. South Korea would prefer to cut Iranian imports and receive an exemption from the U.S., as neighboring Japan has done, than to completely halt shipments of Iranian crude, which may be problematic given that Iran supplies around a tenth of South Korea's crude requirement.
South Korea expects the EU to decide in June whether it will be eligible for insurance coverage for Iranian shipments after July 1, the official said.
SK Innovation Co. (096770.SE), one of two South Korean oil refiners that import Iranian crude, said Tuesday that it hasn't decided whether to halt Iranian imports and is closely consulting with the government about the matter.
SK Innovation fully owns SK Energy, the country's largest oil refiner, which relies on Iran for around 10%-15% of its crude-oil imports.
The government official's comments came after Reuters reported Monday that SK Energy would stop importing crude from Iran after EU sanctions take effect, citing two people with direct knowledge of the matter.
Refiner Hyundai Oilbank Co. is likely to stop importing Iranian crude oil from early June, a company official, who didn't want to be identified, told Dow Jones Newswires Tuesday.
The company can't risk ordering barrels from Iran that would arrive after the EU embargo takes effect, as earning an exemption on insurance "doesn't look easy," the Hyundai Oilbank official said, noting that it takes about a month for shipments from Iran to arrive in South Korea.
Hyundai Oilbank relies on Iran for around 18%, or 70,000 barrels a day, of its crude imports, the official said.
South Korea's imports of Iranian crude oil in the January-March period declined 22.3% compared with the same period in 2011, to 17.7 million barrels, while its imports from other major Middle East producers rose sharply.
April crude import data, due this week, will be closely watched to see whether the reductions accelerate.
Source: Dow Jones