Iran Readies New Crude Delivery to South Korea

Iran is scheduled to send a new condensate cargo to South Korea this week, signaling a return of oil exports to the East Asian country following the tragic sinking of its previous South Korea-bound shipment.

Iran's tanker Sanchi, hauling about 1 million barrels of condensate from the Persian Gulf to South Korea, sank off the coast of China on Saturday after burning for eight days due to a collision with a bulk carrier.

"On Monday, oil carrier 'Hasna', owned by state tanker shipping firm NITC, was loading 700,000 barrels of condensate from the port of Asalouyeh in the Persian Gulf for South Korea," the head of the Iranian Oil Terminals Company said, IRNA reported.

"This is the 54th condensate shipment to South Korea this [fiscal] year" that started in March, Seyyed Pirouz Mousavi added.

The new shipment is destined for South Korea's western port of Daesan, similar to Sanchi.

Mousavi said the maritime incident will not hamper crude oil shipments to Asia's fourth-largest economy.

"We have a long-term oil contract in place and five to seven cargoes are sent to South Korea every month … It's not like we make a shipment and wait for [South Korea to make] the next purchase," he said.

Aboard the ship were 32 sailors, including 30 Iranians and 2 Bangladeshis. Iranian and Chinese officials have confirmed the death of all crew members.

The value of Sanchi's cargo is estimated at around $60 million. Iran has said it will be fully remunerated for the lost cargo because the delivery was based on a free-on-board basis, which means the risk belongs to the buyer after the goods are shipped.

South Korea’s import of Iranian crude oil dropped 30.6% in December from the year before, while inbound shipments from the Middle Eastern nation over the whole of 2017 jumped by 29.1%, customs data showed on Monday.

The world’s fifth-largest crude importer in December brought in 1.08 million tons of Iranian crude, or 255,081 barrels per day, down 30.6% from 1.55 million tons a year earlier, Reuters reported.

According to Mousavi, 126 condensate cargoes have been shipped from Asalouyeh, home to Iran's largest gas production facilities, since March, 53 of which were destined for South Korea, the biggest customer of Iranian condensate.

Oil Spill

The oil slick caused by Sanchi in the East China Sea has spread “noticeably”, raising the prospect of wider environmental damage from what could be the worst spill in decades.

The fuel from the sunken tanker Sanchi, which was carrying 1 million barrels of condensate, covered as much as 134 square kilometers at 12 p.m. local time on Monday, up from about 10 square kilometers the previous day, according to Chinese authorities, Bloomberg reported.

A fire, which had been burning off some of the highly flammable type of light oil, has dissipated, the authorities said.

The cargo is four times larger than the heavier crude on the Exxon Valdez spilled off Alaska in 1989, affecting about 2,092 kilometers of shoreline and destroying thousands of marine fauna. If all the condensate leaked into the sea instead of burning off, the spill would be one of the biggest from a ship over the past five decades.

“We simply do not know if all of the condensate was released, or if some remains in intact cargo holds on the ship at the seabed,” said Richard Steiner, an oil spill specialist based in Alaska. “We need to know this.”