January 12, 2012 / 10:16 AM / in 6 years

UPDATE 1-S.Korea PM heads to Oman, UAE as Iran sanctions bite

(Adds minister’s comment, Einhorn visit)

By Cho Mee-young

SEOUL, Jan 12 (Reuters) - South Korea’s prime minister will visit Oman and the United Arab Emirates from Friday to discuss oil supply, as Seoul seeks a waiver from toughened U.S. sanctions on Iran and looks into options including reducing crude imports from Tehran.

South Korea, the world’s fifth-largest crude importer, buys 10 percent of its oil from Iran.

The country’s knowledge economy minister Hong Suk-woo told Reuters “it was too early to say” if Seoul would reduce oil imports from Iran.

“Our basic stance is to cooperate with the U.S.” Hong told Reuters on the sidelines of a local industry event, adding officials from the two countries would meet next week to talk about “concrete measures”.

The State Department’s special adviser for nonproliferation and arms control, Robert Einhorn, will arrive in Seoul on Monday for a three-day visit to explain Washington’s new sanctions on Iran, the foreign ministry said.

It said South Korea was planning to ask for Washington’s cooperation in minimizing the sanctions’ economic impact on local firms, and a source at the ministry of knowledge economy said discussions were underway ahead of the U.S. talks.

“We are currently considering various measures to cope if we need to reduce Iranian oil imports, if so, by how much, and if not, how we can deal with this matter,” the source, who has direct knowledge of the matter, said.

Korean refiners have struck deals for 2012 supplies with Iran for slightly more than they purchased last year, but are also keeping an eye out for potential replacements, according to company and industry sources earlier this month.

U.S. sanctions that President Barack Obama signed into law on New Year’s eve could prevent refiners from paying for Iran’s oil from July.

Tehran has warned it could shut the Strait of Hormuz, a shipping chokepoint, if sanctions are imposed on its crude exports.

Japan’s finance minister pledged after talks with U.S. Treasury Secretary Timonthy Geithner on Thursday to steadily reduce oil imports from Iran in support of U.S. sanctions on Tehran over its disputed nuclear programme, while India’s government has told its refiners to cut their dependence on Iranian crude.

South Korea’s Prime Minister Kim Hwang-sik leaves Seoul for Oman and the UAE on Thursday “to build stable energy supply bases,” according to a statement from the Prime Minister’s Office.

Asked if he will discuss U.S. sanctions and increased crude oil imports from the Gulf states, a source at Prime Minister’s Office told Reuters: “He will meet Oman’s commerce minister, and it is possible to discuss such matters.”

The UAE and Oman accounted for 10 and 2 percent of South Korea’s 846 million barrels of crude oil imports respectively between January and November of this year, according to state-run Korea National Oil Corp data.

Iran, already struggling to repatriate oil payments under previous sanctions targeting financial transactions, has an estimated $5 billion of oil money stuck in accounts in South Korea. (Editing by Miral Fahmy)

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