Asian buyers of Iran oil to secure US sanctions waiver extension

* Korea, China and India crude imports from Iran fall

sharply

* US decision on sanctions waivers due early December

* Iran's oil exports more than halved by sanctions

SEOUL/NEW DELHI, Nov 30 (Reuters) - Asia's top buyers of

Iranian crude are likely to secure U.S. approval to continue

imports from the Islamic Republic without incurring sanctions,

after cutting volumes sharply in the second half of the year,

according to government and trade sources.

Government officials in India and South Korea said they

expect waivers from U.S. sanctions on Iran, secured in the

middle of the year, to be rolled over for another six months. In

China, the top buyer of Iranian crude and the Islamic Republic's

largest trade partner, traders said the main state-run oil

importers expect a further exemption.

The United States is due to decide early in December whether

to extend the waivers, which it granted on condition that

countries cut their crude imports from Iran. A renewal means

banks in the three countries get another reprieve from the

threat of being cut off from the U.S. financial system.

The sanctions aim to choke Iran's oil trade, the main source

of the country's hard currency, and to force the government to

curb its nuclear programme. The West says Iran is using the

programme to develop nuclear weapons, which Tehran denies.

Tough U.S. and European sanctions have more than halved OPEC

member Iran's oil exports, and most of what is left flows to

Asia. Exports fell to 1.3 million barrels per day in October and

around 1 million bpd in the two previous months.

"We are expecting a very positive result as our imports in

the second half of this year were very low," a South Korean

economy ministry source who has direct knowledge of the matter

told Reuters by phone.

"The announcement will be made around Dec. 7 on the U.S.

state department website as the starting date of the new

extension is Dec. 8. We already have completed talks with the

United States," the source said.

South Korea's imports from Iran during the first 10 months

of the year stood at 44.55 million barrels, down 40 percent on

the year, according to state-run Korea National Oil Corp (KNOC).

"We will definitely get the waiver renewed. We have

substantially cut imports from Iran in the six months, so I

don't see any problem," said an Indian government source privy

to the country's talks with the United States.

From April, the starting month for annual term contracts,

India's imports from Tehran are down 19 percent to about 257,000

bpd to end-September, tanker discharge data shows.

A State Department spokesman said that decisions on

extending the exemptions would not be made until early December.

South Korea and India got their initial waivers on June 11,

followed by China on June 28. All are due for renewal in

December. Japan, the other big Asian buyer of Iranian oil, had

its waiver renewed in September.

In China, traders familiar with the government's thinking

said there was an expectation its exemption would be extended

because of the extent of cuts in imports. The average monthly

decline in Iranian crude imports from a year earlier was more

than 20 percent between July and October, according to customs

data.

DEARTH OF SHIPS

EU sanctions on insurance have led to a dearth of vessels to

ship the oil, forcing China, South Korea and India to rely on

Iran's shipping fleet. The fleet is too small to keep up with

demand, so many buyers have had to cut imports whether they

wanted to or not.

China, the world's second-largest oil consumer, has

repeatedly voiced its opposition to unilateral sanctions such as

those imposed by the United States. It says any measures should

be multilateral and agreed under the purview of the United

Nations.

Still, China's imports have fallen in recent months as

Iranian tankers struggled to ship even the reduced volumes

requested by importing countries. Earlier this year, China

slashed imports by as much as half as the country wrangled over

annual contract terms with Tehran.

China, Iran's top oil customer and biggest trade partner,

has cut imports 22.2 percent in the January-October period to

424,000 bpd compared with a year earlier, customs data shows.

Once the waivers are secured, the focus will be on what

countries need to do to secure another 180 day extension of the

waivers.

Asian refiners are reluctant to slash purchases beyond the

roughly 20 percent cut made this year as many of them operate

plants configured to process Iranian crude. Extending the switch

to different grades will be a technical challenge for some and

incurs costs.

(Additional reporting by Aizhu Chen in BEIJING and Luke

Pachymuthu in SINGAPORE; Writing by Manash Goswami; Editing by

Simon Webb, Aaron Sheldrick and Michael Urquhart)

Most Popular in Business