Carbon Neutrality, Tariff Impact... European Crude Oil Imports Double Increase

Increase in Imports of Carbon-Neutral Certified Norwegian Crude Oil
UK Crude Oil Imports Also Rise with 3% Tariff Reduction Possible under Korea-UK FTA
Middle East Crude Oil Imports Drop to Around 500 Million Barrels

[Asia Economy Reporter Hwang Yoon-joo] Last year, crude oil imports from Norway and the United Kingdom more than doubled compared to the previous year. The demand for Norwegian crude oil, which was the world's first to receive carbon-neutral certification under the ESG (Environmental, Social, and Governance) management policy, increased, and imports of UK crude oil rose due to price competitiveness following tariff reductions.

According to the Korea National Oil Corporation on the 14th, the volume of Norwegian crude oil imports from January to November last year reached 16 million barrels, more than double the 8.6 million barrels imported the previous year. During the same period, UK crude oil imports also surged from 8.3 million barrels to 16.6 million barrels.

The increase in Norwegian crude oil imports is attributed to ESG management. Norwegian crude oil was the first in the world to receive 'carbon-neutral' certification. Although the average price was $71 per barrel, higher than Saudi Arabia's $70, the import volume increased.

An official from the refining industry explained, "Norwegian crude oil is heavy crude, but unlike heavy crude mainly imported from the Middle East, it contains only 0.8% sulfur, making it advantageous under the International Maritime Organization (IMO) regulations. It is recognized as carbon-neutral crude oil, allowing companies to gain ESG management recognition through crude oil imports."

[Image source=Yonhap News]

Imports of UK crude oil increased due to price competitiveness. Domestic refiners are exempt from a 3% tariff when importing UK crude oil. This is thanks to the free trade agreement (FTA) between South Korea and the UK after the UK left the European Union (EU). The average price of UK crude oil is $63 per barrel, 10% cheaper than Saudi Arabia's.

Meanwhile, as crude oil import sources diversified, imports of Middle Eastern crude oil fell to an all-time low. From January to November last year, Middle Eastern crude oil imports were 515.13 million barrels, down 23.8% from 676.4 million barrels in 2020, when oil demand decreased due to COVID-19. Cho Sang-beom, head of public relations at the Korea Petroleum Association, explained, "Recently, the price of Middle Eastern crude oil has been relatively strong, leading to increased imports from other regions such as Europe, South America, and Africa."