SINGAPORE/SEOUL (Reuters) - A South Korean delegation including oil buyers is expected to head to Iran next week to discuss resuming Iranian oil imports after a three-month halt, three sources with knowledge of the matter said.
South Korea is one of eight countries that received waivers from the United States to continue importing Iranian oil for 180 days. It can import up to 200,000 barrels per day (bpd) of Iranian oil, mostly condensate, the sources said, without invoking U.S. economic sanctions re-imposed on Iran on Nov. 5.
The North Asian country was the third-biggest buyer of Iranian oil and also the largest importer of its condensate before it stopped imports in September ahead of U.S. sanctions.
South Korea’s condensate imports from Iran stood at 159,770 bpd in January-August, down about 49 percent from 311,885 bpd in the same period last year, according to Reuters calculations based on the Korea National Oil Corp (KNOC) data.
Condensate is an ultra light oil processed at splitters, typically to produce naphtha for petrochemicals.
While the waiver has given South Korea the green light to resume Iranian oil imports, the sources said issues such as payment, shipping and insurance needed to be worked out.
“The actual (import) volume will depend on next week’s negotiations,” one of the sources said, adding that the oil’s price will be a key factor.
The U.S. sanctions waivers have eased pressure on Iran to further discount its oil against Saudi Arabia’s.
SK Incheon Petrochem, a petrochemical unit of SK Innovation; Hyundai Chemical, a unit of Hyundai Oilbank; and Hanwha Total Petrochemicals, a joint venture between Hanwha Corp and France’s Total, are regular buyers of Iranian condensate.
Each of the three imported between 1 million and 3 million barrels of South Pars condensate a month in the first half of the year, the KNOC data showed. “Having a waiver doesn’t mean you have it in your pocket. You still have to work through the supply chain,” Fereidun Fesharaki, chairman of energy consultancy FGE said at the Condensate and Naphtha Forum in Singapore on Thursday.
South Korea will be paying for Iranian oil in Korean won to escrow accounts handled by the Industrial Bank of Korea (IBK) and Woori Bank, according to a South Korea’s foreign ministry statement released early this week.
Officials from both banks said, however, that won-denominated payments for Iranian oil were still being reviewed, and that no schedule for a resumption has been set.
Buyers are also likely to receive oil delivered by Iran using tankers owned by the National Iranian Oil Co. The United States has warned of potential accidents and costs involving Iranian tankers that are not covered by international insurance.
FGE analyst Den Syahril estimates that Iran has been holding about 20 million barrels of South Pars condensate in storage since August as demand fell.
Another major South Pars buyer, the Emirates National Oil Company (ENOC), has also stopped imports.
South Pars exports, which averaged just above 300,000 bpd in the first half of this year, could fall below 200,000 bpd in the next two years depending on demand from South Korea and China, Fesharaki said.
Reporting by Florence Tan in SINGAPORE and Jane Chung in SEOUL; Additional reporting by Yena Park in SEOUL; Editing by Tom Hogue