SK Innovation replaces Iranian condensate with crudes from Russia, elsewhere

SEOUL (Reuters) - SK Innovation, the owner of South Korea’s top refiner SK Energy and petrochemical maker SK Incheon Petrochem, has been replacing Iranian condensate with crude oil from other countries including Qatar and Russia, a top official said on Monday.

“The share of Iranian condensate was high, but that has been replaced with crude oil from Russia, Kazakhstan and Qatar and we also have been diversifying our crude sources,” Choi Nam-kyu, chief executive of SK Incheon Petrochem, told a news conference.

The switch to other crude oils comes as South Korea and other Iranian oil buyers stopped buying oil from Iran after the U.S. government announced to end sanctions waivers from early May.

Executives speaking at a company briefing also forecast an improvement in refining margins in the second half, and said the company was continuing talks on battery joint ventures.

Refining margins would be helped by demand for low-sulfur diesel ahead of the implementation of tougher marine fuel regulations by the International Maritime Organization in 2020, said Suh Sok-won, president of SK Trading International.

“As products are expected to have a lower sulfur content and more gasoil will be produced, I think it’s right to change our feedstock to light crude,” Suh said.

Yun Yea-sun, head of SK Innovation’s battery business, said talks with Volkswagen AG to set up joint ventures were going well.

SK Innovation is aggressively expanding its battery business, aiming to boost its global battery production 20-fold to 100 gigawatts-hour (GWh) by 2025.

The company said in April it was in talks to set up separate battery-making joint ventures with Volkswagen and Chinese partners.

Reporting by Jane Chung and Hyunjoo Jin; Editing by Clarence Fernandez and Richard Pullin