January 12, 2012 13:19
With impending Western sanctions on imports of Iranian crude oil, large oil buyers like China and Japan are becoming desperate to diversify import channels. The Korean government is working to minimize problems that will arise when import of Iranian fuel becomes impossible.
Chinese Premier Wen Jiabao will goes on a visit to the Middle East on Saturday that takes in Saudi Arabia, the United Arab Emirates and Qatar. Japan was even quicker, and Foreign Minister Koichiro Gemba, who is currently visiting the Middle East, obtained promises from Qatar and the UAE that they will give Japan priority in supplying crude oil, the Japanese press said Wednesday.
The Korean government has taken two-pronged approach to solve problems resulting from sanctions on Iranian oil. Firstly, it has sent a request to the U.S. Congress to exempt Korea as an ally from the sanctions under the National Defense Authorization Act. It is soon going to send a delegation to the U.S. to press the point. Secondly, on the assumption that reducing imports of Iranian crude oil will become inevitable if tensions between the U.S. and Iran deepen, Seoul is devising plans to secure alternative sources. Iranian oil makes up 9.7 percent of Korea’s total crude imports.
Replacing Iranian oil with oil from other sources in the Middle East would cost Korea another US$40 million a year because it tends to be US$3-6 more expensive per barrel than Iranian crude. Prime Minister Kim Hwang-sik plans visits Oman and UAE on Thursday to discuss ways to secure a steady supply of oil.
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