A business lobby group of South Korea asked the US government to extend Korea’s exemption from sanctions on the purchase of Iranian oil.
In a letter sent to Francis Fannon, US assistant secretary of state for energy resources, the Federation of Korean Industries (FKI) argued that the ending of South Korea’s waiver on buying oil from Iran could have a significant impact on the Korean economy,
The United States reinstated sanctions on Iran in November last year, but it gave temporary waivers to eight countries, including Korea, Japan and China to import Iranian crude oil.
The exemption, assessed every six months, is set to end on May 2.
“Given the colossal impact … it is essential that exemption status should be extended for ROK,” read FKI’s letter. “Iranian crude oil, from its quality and cost perspective, is indispensable to the Korean energy industry.”
The FKI explained that South Korea has diversified its oil imports since the sanctions were imposed and that cheap Iranian oil is vital for Korea, which is completely reliant on foreign oil.
The share of US crude oil imports has increased to 10.9 percent this year through February.
US imports had a 5.5-percent share last year and 0.3-percent share in 2015, according to the Korea National Oil Corporation (KNOC).
KNOC data showed that the country recorded zero oil imports from Iran from September to December last year, until the waiver became effective in January.
The business lobby also said that the exemption is important as South Korean businesses rely on Iranian oil-condensate products to produce naphtha due to their superior quality.
In the first quarter of 2018, 51 percent of all oil-condensate imports were from Iran.
The FKI said it would be difficult to immediately find a replacement for Iranian oil-condensates should the exemption end.