South Korea’s actual resumption of Iranian oil liftings could come from January onwards as it takes time to make various arrangements, including shipping.
According to SPGlobal, South Korea was granted a temporary exemption for crude imports from Iran after agreeing to reduce its purchases “significantly,” just as US sanctions against Tehran came into force early this month.
The South Korean government refused to elaborate on the “significant volume,” but sources familiar with the matter have said that the country would be able to import 4 to 6 million barrels/month of Iranian crude, mostly condensate, under the waiver.
South Korea imported an average of 12.32 million barrels/month of crude and condensate from Iran in 2017, according to data from state-run Korea National Oil Corp.
SK Innovation, South Korea’s biggest buyer of Iranian crude, said it was preparing to resume imports of South Pars condensate from Iran for early January delivery.
The refiner has imported around 1 million barrels/month of South Pars condensate until July and 1 million to 2 million barrels/month of Forozan crude from Iran until July.
Hanwha Total, Asia’s largest buyer of Iranian South Pars condensate, is also expected to resume shipments from Iran possibly from January.
Hyundai Oilbank, which had purchased South Pars condensate and other Iranian grades such as Iran Heavy and Forozan, has suspended Iranian crude imports since August.
South Korea has sharply reduced imports of Iranian crude and condensate since May this year to brace for the re-imposition of the US sanctions. It received just 2 million barrels from Iran in August.
South Korea imported 13.07 million mt (95.8 million barrels or 3.09 million b/d) of crude oil in October, up 3.2% from 92.84 million barrels a year earlier, as a result of receiving more cargoes from sources alternative to Iran.
The volume of 95.8 million barrels in October is more than the monthly average of 92.1 million barrels over the first nine months. The October imports were up 20.2% from September’s 79.7 million barrels.
The increase came after the country’s crude imports fell 14.4% year on year in September, which marked the largest decline in nearly nine years, due mainly to the loss of Iranian barrels.
As a result of the reduced crude imports for the past months, South Korea’s crude stockpiles fell 4.2% year on year to 47 million barrels in September, which marked the first decline in two years.
In 2017, the country imported a total 1.118 billion barrels of crude oil, up 3.7% from 1.078 billion barrels in 2016.