Britain, South Korea in Talks to Safeguard Crude Trade

Britain and South Korea are in talks to protect an arrangement of tax breaks for Korean buyers of North Sea crude beyond Britain’s upcoming exit from the European Union, officials from both countries said, although a breakthrough does not look imminent.

An EU free trade agreement has been in place since 2012 with South Korea, Asia’s fourth-largest economy and last year’s third-biggest importer of British North Sea crude, which is a significant source of revenue for the United Kingdom, Reuters reported.

Britain, which is trying to forge new trade relationships beyond Europe, will leave the EU next March and enjoy a status-quo transition until the end of 2020, according to the current plan.

The current trade deal allows EU exporters to sell their oil to South Korean refineries tax-free.

A South Korean trade ministry official who has been part of the discussions, but declined to be named as he was not authorized to speak to media, said talks were going on between the two countries on a new trade deal.

 “So far, we have had two meetings after creating a so-called South Korea-UK trade working group. But as it’s not clear how details for the Brexit will be hashed out, at the moment, we have to wait and see.”

Talks between Britain and the European Union on their future trade relationship after Brexit started this week.

The first meeting of the trade working group was held in Seoul in February 2017 and the second one was in London in December. The South Korean official said the date for their third meeting has not been set yet.

Last year, Korea imported 34.11 million barrels of British oil, up 83.5 % from 2016, making up 3% of Korea’s total crude imports, according to data from state-run Korea National Oil Corp.

In the first two months of this year, South Korea imported 6.07 million barrels of British crude, down 1.67% from a year ago.

Britain’s Department for International Trade said its oil exports to South Korea in 2017 earned Britain two billion pounds ($2.81 billion) and made up 14 % of its total oil exports, the biggest share after the Netherlands and China.

In 2016, Britain exported oil to South Korea worth 800 million pounds, or 8% of Britain’s total oil exports.