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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] LG Chem has successfully secured imports of Russian naphtha as supply disruptions intensify in the petrochemical industry following recent airstrikes on Iran by the United States and Israel. The move marks the first case of coordinated government and private-sector efforts to establish an alternative supply chain to Middle Eastern naphtha.
According to the Ministry of Trade, Industry and Energy and industry sources on March 30, approximately 27,000 tons of Russian naphtha secured by LG Chem arrived in Korea on the same day. The cargo had been idling at sea following Western sanctions on Russia, and LG Chem is understood to have recently finalized an import contract through a Russian intermediary dealer. The shipment is reportedly being delivered to the Daesan petrochemical complex in South Chungcheong Province.
While the volume represents only a small fraction of Korea’s average monthly naphtha consumption—around 4 million tons—industry estimates suggest it could cover approximately three to four days of usage given currently reduced operating rates.
The transaction was made possible by the United States’ temporary easing of export controls on Russian oil and naphtha for one month. On March 12 (local time), the administration of Donald Trump announced a temporary suspension of sanctions on Russian oil cargoes already at sea, allowing sales of such shipments until April 11.
The deal is also believed to have been facilitated after the Korean government confirmed with the U.S. Treasury that secondary sanctions would not apply to Russian petroleum products during this period, and that transactions could be settled in non-dollar currencies such as the ruble or yuan. However, the requirement to complete contracts, payments, and delivery by April 11 remains a key constraint.
Industry officials also expressed concerns about potential downstream risks, noting uncertainty over whether products derived from Russian naphtha could face restrictions when exported to the European Union.
South Korea’s petrochemical industry consumed approximately 59 million tons of naphtha last year, with about 45% (26 million tons) imported. Of these imports, roughly 54% pass through the Strait of Hormuz, placing approximately 25% (14.37 million tons) of total supply at risk from Middle East geopolitical instability.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
