S.Korea imports Iran oil in July despite EU insurance bar

(Reuters) - South Korea imported crude from Iran in July, an unexpected move put down to shipment delays in June cargoes, after Seoul had previously said there would be no imports because of EU sanctions restricting insurance on tankers carrying Iranian oil.

Asia's fourth-largest economy imported 137,400 barrels per day (bpd), 42 percent lower than a year earlier, data from the state-run Korea National Oil Corp showed on Thursday.

In June, South Korea became the first major Asian consumer of Iranian crude to announce that it was halting imports after the government said shipments would be suspended from July 1 because of the European Union insurance ban.

"The cargoes had been booked for June arrivals, but the shipments were delayed by a few days for some reason on the side of those who sent the cargoes," an economy ministry source with direct knowledge of the matter said by telephone.

"So the imports were included in July," added the source, who declined to be identified as he was not authorised to speak to media.

Another source at a refining company said that some imported crude oil may have been held before customs clearance, insisting no shipments of Iranian crude were made to South Korea in July.

South Korea, usually the world's No.4 buyer of Iranian crude, imported 182,000 bpd from Iran in the first seven months of this year, down 21 percent from a year ago, the KNOC data showed.

Economy ministry sources said on Monday that domestic refiners would resume imports of up to 200,000 barrels per day of Iranian crude from September, shifting to Iran the responsibility of insurance, and ending the two-month gap.

Tehran offered to provide up to $1 billion of insurance cover to Iranian vessels shipping oil to South Korea as Iran has a major interest in keeping its crude flowing to South Korea, China, India and Japan - its top four customers.

The four countries, which buy more than half of Iran's oil exports, have slashed Iranian purchases this year under pressure from EU and U.S. sanctions that aim to squeeze Tehran's oil income and curb its nuclear programme.

The West suspects Iran wants to develop weapons. Tehran says its programme is strictly for developing nuclear power.

Of South Korea's four refiners, only SK Energy and Hyundai Oilbank import Iranian crude.

Under term contracts with Iran for this year, SK Energy imports two Very Large Crude Carriers (VLCCs) of crude per month, or 4 million barrels, and Hyundai Oilbank imports one VLCC per month, or 2 million barrels, the economy ministry source said.

South Korea's total crude oil imports fell 0.1 percent in July to 77.79 million barrels from a year earlier.

To plug the Iranian supply cuts, South Korea has turned to other Middle Eastern producers.

Shipments from Kuwait in the first seven months rose 18 percent to over 405,000 bpd, and those from Qatar rose 19 percent to nearly 275,000 bpd.