South Korean petrochemical companies are readying to reduce crude oil imports from Iran to counter possible risks from the United States’ decision to re-impose economic sanctions on the Middle Eastern country.

According to Petronet of Korea National Oil Corp. on Thursday, Korea imported 6 million barrels of crude oil from Iran in May, only 6.3 percent of the country’s total crude oil import volume of 95.18 million barrels. In December, Iranian crude oil made up 13.2 percent.

Korean companies have been adjusting their crude oil import volume in line with changing relations between Iran and the U.S. Korea that depends on imports for almost all of its crude oil supply had purchased less than 5 percent of its total needs from Iran between 2012 and 2015 due to the sanctions.

But following the lift in international sanctions on Iran in 2016, the Middle Eastern country’s share within Korea’s total crude oil imports sharply expanded to 10.38 percent in 2016 and 13.2 percent in 2017. Until May this year when the U.S. announced that it would withdraw from the Iran nuclear deal and renew trade sanctions, Korean companies imported cumulative 44.51 million barrels of crude oil, accounting for 9.7 percent of the total.

Among Korean oil refiners, SK Energy Co. and Hyundai Oilbank Co. import crude oil from Iran. Petrochemical firms SK Incheon Petrochem Co., Hanwha Total Petrochemical Co., and Hyundai Chemical Co. that depend on Iran for condensate, an ultra-light form of crude oil, are preparing to cut down crude oil imports from Iran.

Hanwha Total Petrochemical, which brings in the largest portion of Iranian condensate, has imported total 29.9 million barrels of condensate so far this year and 48.8 percent were from Iran. It is actively seeking to diversify its condensate suppliers. It plans to increase condensate imports from Qatar and Australia while mulling purchasing naphtha, liquid hydrocarbon mixture produced from natural gas condensate as a substitute, the company said.

The company already has begun diversifying its condensate suppliers, said a Hanwha Total Petrochemical official, adding that Iranian condensate may seem to take relatively high portion but it takes up only 30 percent on yearly basis due to high import volume early this year.

Hyundai Oilbank shipped in 7.6 million barrels or 11.4 percent of its total crude oil imports between January and May this year from Iran. It has been putting efforts to readjust its supplier mix. It imported 47 different varieties of crude oil products from 21 countries last year, including Mexico from which the company is gradually expanding its oil imports. As of last year, 14.4 percent of its crude oil imports were from Mexico.

Most of the local oil refiners try to avoid importing crude oil from Mexico because it contains a relatively high level of foreign particles such as sulfur, making suitable for producing low-profit products such as bunker fuel only. Hyundai Oilbank has installed a facility that transforms bunker oil into high-quality light oil like gasoline and diesel. Thanks to such efforts, the company was able to reduce the share of Iranian crude oil imports to 10 percent as of last month, said a Hyundai Oilbank official.

Meanwhile, the Korean government is readying negotiation with the U.S. to get a waiver from the sanctions on Iranian crude oil imports. Many countries are seeking a U.S. pardon to continue importing Iranian oil.

According to Reuters report early this week, U.S. Treasury Secretary Steven Mnuchin said the U.S. will consider waivers for countries in certain cases to avoid “disrupting global oil markets while re-imposing sanctions” on Iran later this year.

By Lee Dong-in and Cho Jeehyun

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