South Korea is open to raising oil imports from Iran if the Persian Gulf country adopts a more aggressive pricing strategy for its crude futures.
The country's Yonhap news agency also said in a report SK Innovation Co. and Hyundai Oilbank Inc, the country's only refiners, are already taking in Iranian oil, but they want a discount of $2-3 per barrel to ramp up imports.
Their combined imports in 2011 reached 87.18 million barrels worth $9.2 billion, but tumbled to 44.92 million barrels worth $4.5 billion in 2014.
South Korea, Asia’s fourth-biggest oil user, imported a record amount of crude last year, but purchases from Iran fell about 8% to the lowest in data going back to 1995.
Market watchers predict an increase in bilateral trade following sanctions relief. Trade between South Korea and Iran tumbled to $6.2 billion last year from $17.4 billion in 2011 due to the sanctions, the agency said.
The news comes as sanctions against Tehran were officially lifted on Saturday, paving the way for additional Iranian crude to flow into the market. Iran said it could increase oil output by 500,000 barrels per day and issued an order to start the ramp-up on Monday. It plans to boost production by the same amount within the following months to reclaim the market share it lost to the likes of Iraq and Saudi Arabia during the sanctions.
According to reports, sanctions cut Iran’s oil exports by about 2 million barrels per day since their pre-sanctions 2011 peak to little more than 1 million bpd.
Some analysts say Iran's return will exacerbate crude prices that hit fresh 12-year lows earlier this week. Global benchmark Brent has collapsed by more than 70% and is struggling at below $30-a-barrel range.
Iranian officials have repeatedly stated that the country's traditional oil buyers, including China, Japan, South Korea and India, are ready to absorb its additional crude amid a global oil glut and falling prices.
South Korean companies were quick to reach out to Iran to expand economic and energy cooperation with the country after Tehran reached a landmark agreement in July with six world powers (the five permanent members of the United Nations Security Council plus Germany) to curb its nuclear program in exchange for some sanctions relief.
In August, Oil Minister Bijan Namdar Zanganeh discussed cooperation in oil extraction, liquefied natural gas production and petrochemical projects with South Korean Minister of Land, Infrastructure and Transport Yoo Il-ho.
South Korea's conglomerate Hyundai Group and electricity giant KEPCO also discussed joint ventures in Iran in September.
KEPCO officials mulled over building a 1,000-megawatt power plant in southern Iran. A preliminary agreement was reached with Hyundai to establish a joint venture for investment in energy projects in Iran and its neighboring countries.
