{"id":2202988,"date":"2023-12-04T16:00:16","date_gmt":"2023-12-04T07:00:16","guid":{"rendered":"https:\/\/koreapro.org\/?p=2202988"},"modified":"2024-01-02T17:42:13","modified_gmt":"2024-01-02T08:42:13","slug":"how-south-korea-balances-its-energy-trade-with-russia-amid-western-sanctions","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/12\/how-south-korea-balances-its-energy-trade-with-russia-amid-western-sanctions\/","title":{"rendered":"How South Korea balances its energy trade with Russia amid Western sanctions"},"content":{"rendered":"
The fluctuating dynamics of global oil markets, impacted by various geopolitical events, have cast a spotlight on South Korea\u2019s energy trade with Russia. In light of this, a closer analysis of the shifts in this trade relationship becomes essential, particularly given the evolving international sanctions against Russia.<\/span><\/p>\n Before Feb. 2022, South Korea\u2019s energy imports from Russia encompassed crude oil, light oils and preparations, liquified natural gas, anthracite and bituminous coal, uranium and wood pellets, totaling $13.2 billion. This figure accounted for <\/span>less than 10%<\/span><\/a> of South Korea\u2019s overall energy imports, which reached $190 billion by the end of 2022, excluding wood pellets.<\/span><\/p>\n As global sanctions against Russia intensified, South Korea adapted its trade policies, aligning with its Western partners. The sanctions included a price cap on Russian oil, a ban on insuring and shipping Russian oil and oil products and restrictions on financial transactions with Russian entities.<\/span><\/p>\n Specifically, South Korea prohibited purchasing, importing, or transferring Russian seaborne crude oil and certain petroleum products. However, South Korea is not part of the <\/span>Price Cap Coalition<\/span><\/a>, which includes Australia, Canada, the European Union, Japan, the U.K. and the U.S. This coalition aims to enforce price caps on Russian oil, set at $60 per barrel for crude oil, $45 for discounted products and $100 for <\/span>premium petroleum products<\/span><\/a>.<\/span><\/p>\n Despite these measures, South Korea\u2019s energy trade with Russia continues, albeit more selectively, with variations depending on the type of energy product.<\/span><\/p>\n SHIFTING ENERGY IMPORTS<\/b><\/p>\n In 2023, statistics from the Korea International Trade Association indicate South Korea ceased direct oil and oil product imports from Russia.<\/span><\/p>\n \u201cIt is highly improbable that South Korean businesses would have attempted to circumvent sanctions on Russian oil due to high costs and also because of the potential reputational damage they would incur if they chose to do so,\u201d Robin Park, an experienced oil trader, told <\/span>Korea Pro<\/span><\/i>.<\/span><\/p>\n In contrast, gas imports from Russia displayed a different trend. Despite a reduction in import volumes \u2014 from $1.7 billion in 2021 to around $1.5 billion in 2022 and down to $700 million by Sept. 2023 \u2014 the fluctuation cannot solely be attributed to sanctions.<\/span><\/p>\n An analysis of longer term trends reveals an alternating pattern of high and low import volumes since the ROK began importing Russian gas in 2009. For instance, between 2016 and 2018, a decrease in import value, despite stable physical quantities, indicated price fluctuations as a key factor.<\/span><\/p>\n It is projected that South Korea\u2019s total volume of gas imports for 2023 will be the lowest since 2009 \u2014 likely influenced by financial complications arising from the inability to use the SWIFT system for transactions with Russia. However, the Korea Gas Corporation (KOGAS) \u2014 South Korea\u2019s primary Russian gas importer, has not indicated a reduction in import volumes.<\/span><\/p>\n