ASTANA, Kazakhstan, March 28. South Korea halted purchasing Kazakhstan's CPC Blend crude in February 2024, industry sources said, Trend reports citing S&P Global Commodity Insights.
According to S&P, this comes as major local refineries find logistics for purchasing light sweet crude too costly and ineffective amid ongoing concerns about maritime safety in the Red Sea.
Asia's third-biggest crude importer, taking zero cargo from the central Asian producer in February.
South Korea has been a regular customer of Kazakhstan's CPC Blend crude. Refiners were broadly fond of the light sweet crude, which has high middle-distillate yields, taking on average around 3-5 million barrels per month over the past decade.
However, zero shipments in February marked the first time South Korea failed to take the light sweet crude since October 2020, the latest data from state-run Korea National Oil Corp. showed.
"Logistics for bringing in CPC Blend have become highly complicated as there are significantly fewer vessels willing to travel to the Red Sea area, while delivery costs are still trending higher due to rising insurance premiums," feedstock managers at two major South Korean refiners told S&P Global Commodity Insights.
CPC Blend crude first gets delivered from production facilities to the Russian Black Sea port of Novorossiysk via the Tengiz-Black Sea pipeline before sailing through the Suez Canal to reach South Korean ports. Since late 2023, CPC Blend crude cargoes for South Korea have detoured the Suez Canal to take the longer Cape of Good Hope route, according to refinery sources with direct knowledge of the matter.
South Korea may still receive a few cargoes in the coming months, as there are a few delays in arrival with the tankers taking the longer Cape of Good Hope path. However, refiners are expected to significantly cut down on CPC Blend crude purchases going forward, according to analysts at Korea Petroleum Association based in Seoul.