BS:South Korea to halt Iran oil imports as EU ban bites
South Korea became the first major Asian consumer of Iranian crude to announce a halt to imports after the government said they would be suspended from July 1st 2012 due to a European Union ban on insuring tankers carrying Iranian oil.
The insurance ban makes it almost impossible to ship Iranian oil as most insurance is undertaken by EU based companies and the move comes as part of a series of measures designed to put pressure on Iran to halt what the United States and others say is a nuclear weapons program.
South Korea depends on the United States for security but it has no natural resources and has been scrambling for alternative crude supplies to replace those from a country that supplied 9.4% of its needs in 2011.
The world's fourth largest buyer of Iranian crude said that it has no plan to provide state guarantee like Japan to continue its imports. Another two major Asian buyers, China and India will allow Iran to deliver the crude from July.
The economy, finance and foreign affairs ministries said that "South Korea's imports of Iranian oil will be suspended, as the EU will suspend crude imports from Iran and also halt its insurance and reinsurance cover on the crude imports from July 1st 2012. The government will continue to make efforts to minimize impacts on domestic industry and the economy including oil supply and exports to Iran although the imports of Iranian oil are suspended.
EU governments approved an embargo on Iranian oil to start on July 1st 2012 and warned Iran that more pressure could be put in place if it continued to defy international demands for limits on its nuclear program. Around 90% of the world's tanker fleet is covered by Western based protection and indemnity clubs which insure against personal injury and environmental clean up claims.
Japan will provide sovereign guarantees for Iranian shipments, China has asked Iran to deliver the crude while India has said it would allow state refiners to import Iranian oil with Tehran arranging shipping and insurance, from July 1st 2012.
Mr Moon Jaedo deputy minister for international affairs at the economy ministry said that "Most of the Iranian oil has already been replaced by Iraq, Kuwait, Qatar and the UAE and also imports from the spot markets, although still some is left to be covered. South Korea had not planned to use state guarantees for Iranian shipments as Japan had done.ā€¯
According to official data, South Korea's imports of Iranian crude oil fell nearly 40% in May from a year earlier reflecting Seoul's efforts to reduce purchases in return for a waiver from US sanctions that could have hit its companies.
Data from the state run Korea National Oil Corporation showed that South Korea imported 29.22 million barrels from Iran during the first 5 months of the year or about 192,000 barrels per day, down almost 16% from a year ago.
