South Korea to Take First Iran LPG Cargoes in 7 Months

By MarEx 2013-05-23 09:43:00

South Korea will receive a shipment of Iranian liquefied petroleum gas (LPG) for the first time since imports were halted last October due to European sanctions that made it difficult to get shipping insurance, sources said on Thursday.

South Korean LPG importer E1 Corp bought 33,000 tonnes of propane and 11,000 tonnes of butane that were loaded on Monday at an Iranian port, two company sources said.

One of the sources said there had been no Iranian LPG shipments since last October, although customs data has shown tonnage that the company has moved out from bonded areas.

E1 stored Iranian LPG imported before sanctions in its tanks in bonded areas before clearing customs, added the source, who declined to be identified as he was not authorised to speak to media.

"This time the deal was possible as Iran offered shipment, but it is hard for us to predict if this can continue," he said.

The second source said E1 purchased the cargo because of competitive prices but did not plan further shipments.

U.S. and European Union sanctions aimed at choking the flow of oil money into Iran and forcing Tehran to negotiate on curbing its controversial nuclear programme halved Iran's crude exports in 2012, costing it as much as $5 billion a month.

The EU broadened those sanctions to importing and transporting Iranian gas last October, also bringing the LPG exports to a halt.

LPG, which comprises propane and butane, comes mainly from oil rather than natural gas, but shippers and insurers have been wary of anything Iran-related due to uncertainty over the scope of some of the EU sanctions.

South Korean customs data showed imports of 89,154 tonnes of propane and 25,398 tonnes of butane from Iran in the first four months of this year. Those volumes, according to the E1 sources, came from LPG shipped into bonded areas before November 2012.

South Korea imported 1.13 million tonnes of propane and 555,555 tonnes of butane from Iran for all of last year.

The other LPG importer in South Korea, SK Gas Ltd , said it has not imported any LPG or moved any volumes out of bonded areas since October last year.

South Korea's imports of Iranian crude in April fell nearly 45 percent from a year ago to 4.18 million barrels, according to official data.

Its Iranian oil imports from December through April fell 19.7 percent from a year ago. South Korea is targeting a 20 percent cut in the six months to May 31 to secure a third 180-day extension to a waiver on U.S. sanctions granted to Asian importers that make continuous reductions in oil purchases from Iran.

--Reporting by Meeyoung Cho; Editing by Tom Hogue (C) Reuters 2013.