February 13, 2013 / 11:26 AM / in 5 years

UPDATE 1-Samsung Total halts oil purchases from Iran

* French parent Total objected to spot deal

* Total at risk of breaching EU sanctions

By Muriel Boselli and Michel Rose

PARIS, Feb 13 (Reuters) - South Korea’s Samsung Total Petrochemicals has stopped purchasing oil from Iran after its French owner objected, Total’s head of refining Patrick Pouyanne told Reuters on Wednesday.

Samsung Total had bought one cargo of Iranian oil after a year’s hiatus, unable to resist the lure of cheap oil from the Islamic republic to offset the thin margins in plastics, people familiar with the deal told Reuters last month.

“There was a spot purchase, but it will stop,” Pouyanne said on the sidelines of the group’s annual results announcement. “Total has told this company (Samsung Total) and its partner that we did not agree with that policy because our aim is to respect laws that apply to us.”

Samsung Total had stopped importing oil from Iran last year after the United States and European Union imposed sanctions aimed at halting Iran’s nuclear programme, which the West suspects is being used to develop arms. Tehran insists that it is developing nuclear power to generate electricity.

Total’s move highlights the intense pressure the West is putting on companies to limit dependence on Iranian oil. The sanctions have made it hard for buyers to ship and pay for oil from Iran, halving the OPEC member’s crude exports last year.

The French energy giant’s objection aside, a revival in imports of Iranian oil by Samsung Total would have required other Korean buyers to reduce purchases to ensure that the country qualifies for its six-month exemption from U.S. sanctions, a U.S. state department official said last week.

South Korea, which reduced crude imports from Iran by 36 percent to 153,400 barrels per day last year, is aiming for a further 20 percent cut year on year in the six months to May to secure an extension to the waiver when it comes up for renewal in May.

French official sources said last month that the government was looking at whether the Samsung Total purchase broke international sanctions.

“A French company is not allowed to buy oil directly or indirectly from Iran,” said Ardavan Amir-Aslani, a Paris-based lawyer who specialises in the energy sector and the Middle East.

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