SINGAPORE/SEOUL Feb 4 SK Energy Co Ltd, South Korea's largest refiner, has bought CPC Blend crude from Kazakhstan for the first time, taking two cargoes for arrival in the coming two months, industry sources familiar with the matter said on Tuesday.
Weak demand in Europe has depressed CPC Blend's spot premiums, creating an opportunity for SK Energy to buy the grade and take advantage of a freight rebate provided by the Korean government, they said.
The refiner, wholly owned by SK Innovation, has bought 1 million barrels of CPC Blend for delivery in each of March and April, one source said. The seller and prices of the cargoes were not immediately available.
A spokesman at SK Innovation declined to comment.
The crude, of API gravity of 45.3 degrees and a sulphur content of 0.59 percent, yields more than 40 percent naphtha, which is used in petrochemical production, according to an assay on Chevron Corp's website.
South Korea, the world's fifth-biggest buyer of crude oil, last year boosted incentives for crude imports from regions other than the Middle East to cut its heavy reliance on producers there amid rising geopolitical risks.
Under a revised law, which took effect on June 1 of last year, for crude oil imports from the Americas, Africa and Europe, Seoul covers 90 percent of the freight charge difference with Middle East suppliers if annual imports by a company reach 2 million barrels a year, down from 7 million previously. (Reporting by Florence Tan; Additional reporting by Meeyoung Cho; Editing by Tom Hogue)