Go to contents

Iran uses stick and carrots to get Korea to resume oil imports

Iran uses stick and carrots to get Korea to resume oil imports

Posted June. 29, 2012 23:18,   

한국어

Iran is trying to have Korea resume oil imports by offering to deliver crude oil with Iranian tankers and a payment guarantee of 1 billion U.S. dollars on shipping insurance.

Tehran is also using diplomacy to achieve its goal, with its ambassador to Seoul and oil minister pressuring Seoul to resume Iranian oil imports.

Diplomatic sources on Friday said Iran recently proposed the shipping insurance guarantee while offering the use of its own oil tankers to ship Iranian crude to Korea. Under the offer, Tehran would pay up to 1 billion dollars in compensation if an accident in shipping caused damage to vessels, cargo and crew.

The payment guarantee, however, is far short of the 7 billion dollars Seoul expected. It is also unclear whether Korea can force Iran to meet its financial obligations if an accident occurred.

"We are considering Iran`s offer," a senior Korean official said. "Though many issues must be addressed in reality, there are arguments that Korea should maintain smooth relations with Iran by importing at least a small volume of Iranian oil in the event that international sanctions on Iran are lifted."

With Iran`s inventory of unsold crude oil rising due to sanctions by the U.S. and the European Union, the Islamic country has strongly requested that Korea resume its import of Iranian oil. After Iranian Ambassador to Seoul Ahmad Masumifar suggested the possibility of Iran halting Korean imports Wednesday, Iran`s Petroleum Minister Rostam Ghasemi said Thursday that his country would reconsider bilateral ties if Korea halted Iranian crude import. Such pressure is interpreted as a demand that Seoul accept Tehran`s offer of oil shipment.

The problem for Korea is the tough atmosphere in the U.S., which is leading the Iran sanctions. United Against Nuclear Iran, a U.S. civic group seeking to prevent Iran`s nuclear weapons development, recently sent a letter to the Korea Register of Shipping, a Korean organization for risk assessment for vessels, urging it to stop assessing major Iranian shipping companies. If the demand is accepted, no Iranian vessel will be allowed to enter a Korean port.

A Korean government official said, "We will come up with a reasonable solution after comprehensively considering the U.S. government`s response and the bankruptcy risks to Korean small and medium-sized companies."



sukim@donga.com lightee@donga.com