* EU to halt insurance on Iran crude shipments from July 1
* Seoul depends on Europe insurers for Iran oil shipping P&I
* S.Korea to secure alternative crude, cut its Iran exports
* Most of Iran cut covered by Iraq, Kuwait, Qatar, UAE; also
* S.Korea, unlike Japan, has no plan to provide
state-guarantee for insurance
(Adds graphic links and details from ministry briefing)
By Meeyoung Cho
SEOUL, June 26 South Korea became the first
major Asian consumer of Iranian crude to announce a halt to
imports after the government said they would be suspended from
July 1 due to a European Union ban on insuring tankers carrying
The insurance ban makes it almost impossible to ship Iranian
oil as most insurance is undertaken by EU-based companies and
the move comes as part of a series of measures designed to put
pressure on Iran to halt what the United States and others say
is a nuclear weapons programme.
South Korea depends on the United States for security, but
it has no natural resources and has been scrambling for
alternative crude supplies to replace those from a country that
supplied 9.4 percent of its needs in 2011.
The world's fourth largest buyer of Iranian crude said it
has no plan to provide state guarantee like Japan to continue
its imports. Another two major Asian buyers, China and India,
will allow Iran to deliver the crude from July.
"South Korea's imports of Iranian oil will be suspended, as
the EU will suspend crude imports from Iran and also halt its
insurance and reinsurance cover on the crude imports from July
1," a joint statement from the economy, finance and foreign
affairs ministries said.
"The government will continue to make efforts to minimise
impacts on domestic industry and the economy including oil
supply, and exports to Iran, although the imports of Iranian oil
are suspended," the statement said.
The official confirmation follows a Reuters story on May 21
that had cited sources as saying South Korea would become the
first of Iran's major Asian customers to halt oil purchases.
EU governments on Monday approved an embargo on Iranian oil
to start on July 1 and warned Iran that more pressure could be
put in place if it continued to defy international demands for
limits on its nuclear programme.
Around 90 percent of the world's tanker fleet is covered by
Western-based protection and indemnity (P&I) clubs, which insure
against personal injury and environmental clean-up claims.
Japan will provide sovereign guarantees for Iranian
shipments, China has asked Iran to deliver the crude while India
has said it would allow state refiners to import Iranian oil,
with Tehran arranging shipping and insurance, from July 1.
MOST IRANIAN OIL REPLACED
South Korea's economy ministry said it had already secured
most of its replacement oil.
"Most of the Iranian oil has already been replaced by Iraq,
Kuwait, Qatar and the United Arab Emirates, and also imports
from the spot markets, although still some is left to be
covered," Moon Jaedo, deputy minister for international affairs
at the economy ministry, told a briefing.
Moon said that South Korea had not planned to use state
guarantees for Iranian shipments, as Japan had done.
South Korea's imports of Iranian crude oil fell nearly 40
percent in May from a year earlier, according to official data,
reflecting Seoul's efforts to reduce purchases in return for a
waiver from U.S. sanctions that could have hit its companies.
South Korea imported 29.22 million barrels from Iran during
the first five months of the year, or about 192,000 barrels per
day, down almost 16 percent from a year ago, data from the
state-run Korea National Oil Corp showed on Monday.
The United States earlier this month extended exemptions
from its sanctions on Iran's oil trade to seven more countries
including South Korea.
Of South Korea's four refiners, only SK Energy and Hyundai
Oilbank import Iranian crude. Sources said both refiners will
stop importing from Iran when the EU insurance embargo takes
effect from July 1.
It was not immediately clear what the two refiners will do
with their existing contract to buy 200,000 bpd of Iranian oil
The United States and the European Union accuse Iran of
trying to build nuclear weapons. Tehran says the programme is
strictly for civilian purposes.
South Korea has also imposed curbs on exports of goods to
Iran to reduce the risks of payment defaults.
Korean exporters usually receive payments via
won-denominated deposits of the Iranian central bank that are
generated by Iran's oil sales here.
(Editing by David Chance and Ed Davies)