South Korean refiner inks Saudi deal

SEOUL - Agence France-Prese

South Korean oil refiner S-Oil said yesterday it had signed a 20-year supply deal with Saudi state oil giant Aramco, as Seoul tries to secure stable energy sources amid sanctions on Iranian crude.

S-Oil, the nation’s third-largest oil refiner, said Aramco will provide about 230 million barrels of crude oil each year, about 30 percent of the country’s total annual consumption.

The 20-year contract is highly unusual in the crude market where most deals are renewed every year, S-Oil said in a statement, adding that years-long ties between the two firms helped secure the deal.

Saudi Aramco is the largest shareholder in S-Oil with a 35 percent stake.

S-Oil does not import from Iran. But it said the deal offers assurances that its needs will not be disrupted by “serious volatility in the market” due to sanctions on Iranian crude for its suspected nuclear weapons programme.

“Now the deal... will ensure stability of our refinery operation despite the (planned) sanctions on Iranian oil and (Iran’s) threat to block the Strait of Hormuz,” S-Oil said.

South Korea imports almost all of its oil from overseas, with about 10 percent coming from Iran.
Seoul, a close US ally, has been under growing pressure from Washington to significantly cut its oil imports from Tehran.

Saudi Arabia this week reportedly vowed to ensure a stable oil supply to South Korea, during a visit by President Lee Myung-Bak to Riyadh.

Saudi Oil Minister Ali al-Naimi, during a meeting with Lee on Tuesday, “promised to help ensure a stable supply of crude to South Korea”, Yonhap news agency cited an unidentified Seoul official as saying.