S. Korea Feb Iran oil imports soar ahead of shutdown

SEOUL (Reuters) – South Korea’s crude imports from Iran surged 104 percent in February from a year earlier as refiners hiked purchases ahead of maintenance shutdown starting from March, according to the country’s customs data and a refining source.

South Korea imported 1.1 million tons of Iranian crude last month, or 294,069 barrels per day (bpd), up 4.5 times from January and double from a year earlier, preliminary customs data showed on Saturday.
In the first two months of the year, South Korea imported 173,744 bpd, up 2.3 percent from a year ago, and a surge of 30 percent from the 134,000 bpd that Seoul took from Iran in 2013.
Under the Geneva accord between Iran and six major powers last November that took effect in January, South Korea and other Asian buyers can hold to crude imports at the sanctions-reduced rates reached at the end of 2013.
“The two refiners had to hike the imports ahead of maintenance shutdown starting from March. Before and after the maintenance, refiners usually import more to meet annual import contracts,” a Seoul-based refining source told Reuters.
Of four South Korean refiners, SK Energy and Hyundai Oilbank are the only ones that buy Iranian oil on a regular basis. Their Iranian crude imports can vary from month to month as one of the two refiners that buy from the OPEC receives the oil only every other month.
SK Energy will shut a 260,000 bpd No. 5 crude distillation unit (CDU) and a 57,000-bpd No.1 gasoline-making unit in the second quarter for maintenance, a spokesman at parent SK Innovation Co Ltd said.
Hyundai Oilbank will shut its No.1 110,000-bpd CDU in April for maintenance, it said last month.
Iran’s top four buyers – China, India, Japan and South Korea – have been steadily cutting purchases over the last two years to avoid falling foul of toughened U.S. and EU sanctions put in place in 2012.
Together they cut oil imports from Iran by 15 percent on the year to an average of 935,862 bpd in 2013, government and industry data showed.
The interim deal reached last Nov. 24 between Iran and six major powers eases some of the sanctions – including freeing up some frozen oil payments – in return for curbs to Iran’s uranium enrichment program.
The deal also allows Iran to keep its oil shipments at the reduced levels of about 1 million bpd, less than half of pre-2012 levels.
Iran’s top four buyers, though, took 1.25 million bpd in January, with increases in China and India outweighing on-year reductions from Japan and South Korea.
Indian government sources said this week that refiners there will have to cut oil purchases by nearly two-thirds from first-quarter levels after a U.S. energy official reminded them that Iranian import volumes were not to rise.
That was the first clear sign of U.S. intolerance of higher exports from Iran, and came after India’s January intake of Iranian crude doubled to 412,000 bpd from the previous month.
Under the interim deal, South Korea transferred $550 million to Iran this month in its first back oil payment, sources with direct knowledge of the matter said.
Asia’s fourth-largest economy imported a total of 10 million tons of crude last month, or 2.6 million bpd, compared with 11 million tons in January 2013, the customs data show.
Final data for the February crude oil import data will be made available by state-run Korea National Oil Corp later this month.

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