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South Korea extends Iran sanctions but leaves accounts intact

Published:

South Korea on Friday imposed new sanctions on Iran, banning fresh investment in its oil and gas sectors and blacklisting additional Iranian firms and personnel, although its moves appeared to fall short of demands from Washington.

South Korea’s finance ministry said it would keep bank accounts held by the Iranian central bank in Seoul open so as not to disrupt crude oil supply from the Gulf nation that supplies almost 10 percent of its oil needs.

Legislation passed by the House and Senate in Washington this week sought to force countries to close the accounts or risk being cut off from the U.S. financial system in a bid to slow Iran's nuclear program.

“We will add 99 groups and six personnel regarding the Iranian nuclear program development,” a statement from the finance ministry said.

Last year, South Korea, the world’s fifth largest crude oil importer, blacklisted the Seoul branch of Bank Mellat and 101 other Iranian companies under international sanctions but allowed Iran’s central bank to open accounts denominated in Korean won for oil payments.

Iran has not been able to repatriate the fund which is now estimated to hold up to $5 billion of oil money.

According to latest industry data from the Korea International Trade Association, South Korea imported oil and other products worth $10.87 billion between October of 2010 and October 2011 and had exports worth $6.14 billion.

South Korea backed down from an earlier plan to ban Iranian petrochemical imports.

“We plan to suggest to domestic firms that they take cautious measures in their petrochemical product purchases,” the ministry statement said.

South Korea imported $350 million worth of Iranian petrochemicals last year, while exporting $450 million worth of its own petrochemicals to Iran. South Korea’s global trade in petrochemicals last year totaled $49 billion.

Sources said on Thursday that South Korea would seek a waiver, if the United States moves to penalize banks that do business with Iranian central bank.

“We are in talks with the U.S. to mitigate the sanctions such as having an exemption so as to make crude imports possible via (Korean) won-denominated payments,” a finance ministry official said on Friday.

He could not be named due to the sensitivity of the issue.