South Korea Doubling Iranian Oil Imports

South Korea Doubling  Iranian Oil ImportsSouth Korea Doubling  Iranian Oil Imports

South Korea is pushing to more than double its import of crude and condensates from Iran as part of efforts to boost its oil trade with the Middle Eastern country, industry sources said on Tuesday.

Seoul and Tehran will likely sign a series of deals on the promotion of oil trade early next month, when President Park Geun-hye visits Iran to promote business ties between the nations, leading a delegation of some 200 businesspeople, Yonhap News Agency reported.

Her visit, the first of its kind by a South Korean president since the two sides established diplomatic ties in 1962, comes as Iran has emerged as a high-potential market after years of international sanctions were lifted in January.

With a population of over 80 million, Iran is a resource-rich nation, holding the world's fourth-largest oil reserves and the second-largest gas reserves. 

"South Korea and Iran are expected to sign several memoranda of understanding as South Korea is seeking to find a stable source of crude, while Iran wants to have a base for tapping into the northeast Asian market," an industry source said.

"By signing the deals, Seoul is moving to increase its daily crude imports from Iran to around 280,000 barrels this year from 115,000 barrels last year."

Iran had been a major exporter of crude to South Korea, but international sanctions on Tehran over its nuclear program sharply reduced bilateral trade.

Last year, South Korea imported $2.20 billion worth of crude oil from Iran, down 51% from the previous year and far lower than $9.36 billion in 2011.

By volume, imports of crude and condensates reached 42.4 million barrels last year. Condensates, which are very similar to light stabilized crude oil, are used as feedstock for oil refining and other petrochemical industries.

Imports of crude from Iran, however, began to surge this year following the lifting of the international sanctions on Tehran.

In the first three months of this year, South Korean imports of Iranian crude jumped 17.6% on-year to $629 million, with the volume reaching 22.85 million barrels.

Imports of Iranian condensates rose more than ninefold from a year earlier to $247 million in the January-March period. For all of last year, imports of condensates from Iran was worth $358 million.

On top of boosting imports of Iranian crude, South Korea will push for a joint project to stockpile 2 million barrels of Iranian crude and condensates at a storage facility south of Seoul, according to the sources.