SEOUL, Apr 27: South Korean’s largest oil refiner, SK Energy, is securing alternative supplies to make up for potential cuts in monthly Iranian crude imports from the current 10-15 percent level due to Western sanctions on Tehran, its parent company said today.
South Korea, the world’s No.4 buyer, has joined China, Japan and India, the other key consumers of Iran’s 2.2 million barrels per day of exports, in reducing demand as sanctions make it harder to pay for, ship and insure the oil.
“Import volumes from Iran will not change much for now as we have not yet decided how much we will cut. In response to possible cuts in imports, we are securing alternative crude and establishing supply plans,” a senior official at its parent SK Innovation told an analysts’ call.
SK Innovation fully owns SK Energy, which has a refining capacity of 1.115 million barrels per day.
Of South Korea’s four refiners, SK Energy and the smallest, Hyundai Oilbank, import Iranian crude. They increased the volume of Iranian crude purchases under annual contracts this year to 200,000 bpd – 130,000 bpd by SK Energy and 70,000 bpd by Hyundai Oilbank – from around 190,000 bpd in 2011.
The two refiners have been halting purchases of Iranian crude on the spot markets, while maintaining their lifting of term barrels contracted with Iran, according to sources at the companies.
Industry and company sources said on Thursday that Hyundai Oilbank had decided to stop lifting cargoes from June, while SK Energy is sticking to a plan to lift annual committed volumes at least until June.
Industry experts say that SK Energy may find it easier to secure alternative grades to Iranian crude as it now processes 60 to 70 different kinds of crude.
Data from state-run Korea National Oil Corp showed on Monday that South Korea’s Iranian crude oil imports fell by more than 20 percent to 195,000 bpd in the first quarter of this year, led by a 40 per cent cut in its import in March. Other Middle East producers have helped South Korea plug the cuts from Tehran. (AGENCIES)
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