South Korea, Oman to cooperate to stabilise oil supply to Seoul

South Korea, Oman to cooperate to stabilise oil supply to Seoul

South Korea and Oman have agreed to cooperate to ensure stable oil and gas supply to Seoul while the country seeks a waiver of toughened US sanctions on Iran and weighs up options, including reducing crude imports from Tehran.

January 16, 2012 12:28 by Reuters

South Korea, the world’s fifth-largest importer of crude, buys 10 percent of its oil from Iran and 2 percent from Oman. Prime minister Kim Hwang-sik visited Oman over the weekend before heading to the United Arab Emirates for oil supply talks.

“Both sides have agreed to closely cooperate to continue stable energy supply, including liquefied natural gas and crude oil in the face of instability in the international crude oil markets,” the Prime Minister’s Office said in a statement, referring to the meetings between Oman and South Korea.

Domestic media also quoted an official in the Prime Minister’s Office as saying Oman’s Sultan Qaboos bin Said Al-Said said Oman would step in to help if South Korea had difficulties in importing crude.

US sanctions that President Barack Obama signed into law on New Year’s Eve could prevent refiners from paying for Iran’s oil from July. Tehran has warned it could shut the Strait of Hormuz, a shipping chokepoint, if sanctions are imposed.

Iran also warned Gulf Arab neighbours they would suffer consequences if they raised oil output to replace Iranian crude.

The State Department’s special adviser for nonproliferation and arms control, Robert Einhorn, visits Seoul for three days from Monday to explain Washington’s new sanctions on Iran.

“No policy to cut oil imports from Iran has been set before the meetings (with Einhorn), as the meetings will address each side’s situation,” an official at the ministry of the knowledge economy in charge of energy policy told Reuters by telephone.

“We are looking into all the options including if we need to reduce oil imports from Iran, and if so, how much we need and if not, what we can do, including alternative supplies.”

Korean refiners have struck deals for 2012 supplies with Iran for slightly more than they purchased last year, but are also keeping an eye out for potential replacements, according to company and industry sources.

Iran, already struggling to repatriate oil payments under previous sanctions targeting financial transactions, has an estimated $5 billion of oil money stuck in accounts in South Korea.

South Korea imported 846 million barrels of crude oil imports between January and November last year, and of the total, the UAE accounted for 10 percent, according to state-run Korea National Oil Corp data. (Reporting by Cho Mee-young; Editing by Clarence Fernandez) *Image from chosun.com