S Korean refiners to load Iran crude on at least two VLCCs in September
South Korean refiners will load crude from Iran on at least two Iranian VLCCs in September, the first imports from Iran since loadings were suspended in June, a South Korean source told Platts Thursday, Platts reports.
"The ships have been nominated for September [loading]," said the source, adding that it was not immediately clear whether the tankers would arrive in September.
It was also unclear whether the two tankers would be fully laden, in which case the refiners would be importing some 130,000 b/d of Iranian crude in September.
Officials at refiners SK Innovation and Hyundai Oilbank -- which suspended shipments from Iran in June before the loss of EU-linked protection and indemnity shipping insurance -- declined to comment Thursday.
Sources told Platts on July 26 that South Korean refiners had accepted an offer from the National Iranian Oil Company to deliver oil on Iranian tankers and provide insurance cover for the shipments, and that they were looking to resume crude imports from Iran as early as September.
EU sanctions, which came into force on July 1, include a ban on the provision of insurance for shipments of Iranian oil, even to countries outside the EU.
A South Korean government official told Platts Thursday that the refiners are in the "final stage" of negotiations with NIOC "over price, shipping costs, insurance and loading schedules and other details."
"We expect the agreement to come late this month or early next month," the official said.
This means Iranian oil would not arrive in South Korea before the second half of September because the voyage from Iran takes around 20 days.
The official declined to disclose the refiners' estimated Iranian crude import volumes going forward but he said they would be sharply reduced due mainly to the availability of Iranian VLCCs.
"The government is striving to protect refiners and [South Korean goods] exports [to Iran] but will abide by US, EU sanctions," the official added.
South Korean manufacturers and exporters have been indirectly paid through the Iranian central bank's won-denominated accounts in Seoul, into which South Korean refiners pay for Iranian crude, a measure to avoid US financial sanctions over Iran's nuclear program.
If refiners no longer put money into the account, the exporters have no means of receiving payment, which could lead to bankruptcies.
South Korea won a 180-day exemption from US financial sanctions that came into force on June 28 after it pledged to reduce oil imports from Iran.
The waiver will be reviewed in October, when further cuts may be necessary. Close cooperation with the US is crucial for South Korea to address the problem of North Korea's nuclear arms.
Over the first six months of this year, South Korea's crude imports from Iran averaged about 189,000 b/d, well below the 230,000 b/d average for the same period of 2011. In June, the country imported an average 176,000 b/d, more than 24% down from the 233,000 b/d imported in June 2011, but up from 128,000 b/d in May.