North Sea Crude Exports to Korea to Fall on Tax Change, JBC Says

North Sea crude shipments to South Korea are likely to drop next month as the Asian nation considers cutting rebates paid to domestic refiners for exporting oil products, according to JBC Energy GmbH.

The South Korean government asked oil companies to submit comments on the proposed tax revisions by March 18, officials at the Korea Customs Service, SK Innovation Co. and the Korea Petroleum Association, which represents the country’s four oil- processing companies, said yesterday, asking not to be identified, citing department and company policies.

Under proposed changes scheduled to take effect April 1, refiners that import North Sea crude would receive smaller rebates on their exports of oil products, according to the officials.

“We can expect fewer flows of North Sea crude to the Far East from April, and those that do make the trip will likely reflect the mechanisms of arbitrage more clearly,” a JBC Energy team of analysts led by David Wech in Vienna said in a report today. “However, full clarification of the impact on North Sea crude will only be possible once concrete information emerges.”

At least 58 million barrels of North Sea crude has been loaded or scheduled for shipment to the Asian nation since South Korea and the European Union signed a free-trade agreement in July 2011. The accord exempts Korean buyers from a 3 percent tax on EU imports. Royal Dutch Shell Plc (RDSA) was the latest company to book a tanker to South Korea, chartering the Abqaiq to load 275,000 metric tons on April 1 from Hound Point in the U.K.

South Korea imported 24.8 million barrels of crude from the U.K. last year, compared with 3.06 million barrels in 2011, according to data from the Korean National Oil Corporation. It purchased 18.8 million barrels of Norwegian crude in 2012, up from 2.1 million barrels the previous year, the data show.

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