SEOUL  - South Korea's imports of Iranian crude surged 20 percent in 2011, the latest indication of Korea's dependence on the Iranian oil even as it faces pressure from its ally the United States to cut back, Reuters reported.

 

The rise in Iranian crude imports was more than three times greater than the increase in Korea's overall oil purchases in 2011 and some refineries have indicated they will buy more, not less, from the OPEC producer this year. 

Crude imports from Iran rose to 238,860 barrels per day (bpd) in 2011 from 198,918 bpd in 2010, the state-run Korea National Oil Corp (KNOC) said.

 

Of South Korea's four crude oil refiners, SK Energy and Hyundai Oilbank import Iranian crude oil. The two refiners struck annual deals to buy a total of 200,000 bpd of Iranian crude this year, up from around 190,000 bpd in 2011, government sources and company officials said.

 

Most Iranian crude is sold under long term deals, although some cargoes can be bought in the spot market.

 

South Korea imported 2.54 million barrels per day (bpd) of crude oil last year, compared with 2.39 million bpd a year ago, the KNOC data showed.

 

In a recent meeting with U.S. officials, South Korea, Asia's fourth-largest economy, argued it would have difficulty in replacing Iranian oil supplies, which account for nearly 10 percent of its crude imports.

 

Iran's top crude buyer China also boosted imports in 2011. China's shipments rose 30 percent year-on-year to 27.76 million tons, or about 555,200 bpd, Chinese customs data showed, keeping China in the top spot of Iran's global crude clients.

 

South Korea owes Iran's central bank some $5 billion for crude oil imports, but the money is trapped in its banking system because of the difficulty of sending money to Iran without falling foul of U.S. sanctions.

 

South Korea sourced 87 percent of its total crude imports last year from the Middle East -- mainly Saudi Arabia, Kuwait, Qatar, the United Arab Emirates and Iran -- up from 82 percent in 2010, according to KNOC data.

  

Iranian Oil Cheapest of Korea’s Imports

 

Iranian oil was the cheapest of all crude oil Korea imports from abroad, except for Colombia, Oman and the Saudi-Kuwait neutral zone from where only small volumes are bought, the Korea Herald reported.

 

Korea imported 846.59 million barrels of crude oil in the 11 months leading up to November from 23 countries including Saudi Arabia, Kuwait, Qatar, Iran and Oman, according to Petronet, an oil information provider run by the Korea National Oil Corporation.

 

Cutting Iran oil export to hurt Korean refiners 

 

“Iran accounted for 9.76 percent of Korea’s crude oil imports and is the fourth-largest in import volume, but is the least expensive in effect,” an official at a domestic oil refiner said.

 

“Therefore, if Iranian oil imports are reduced or banned, it would definitely hurt Korean refiners.”

 

Iranian oil is inexpensive because it is heavy crude oil which has high sulfur content.  
 

 (Source: Agencies)