SEOUL: South Korea will transfer $550 million to Iran in its first back oil payment under an interim nuclear deal that eases sanctions on Tehran, sources with direct knowledge of the matter said on Thursday.
The payment on Friday will come after Japan cleared some of its dues as the U.N. atomic watchdog said the Islamic republic is reducing its most proliferation-prone nuclear stockpile as required under a landmark deal signed with six world powers.
Under the November pact, Iran won access to $4.2 billion of its oil revenues frozen abroad in eight money transfers scheduled through July, pending confirmation it is carrying out its promises to curb its nuclear programme.
The second and third payment schedules were due March 1 and March 7, for $450 million and $550 million, respectively. Japan started off the payments with a $550 million transfer on Feb. 1.
"Oil import payment will be made tomorrow," a source with direct knowledge of South Korea's payment told Reuters by phone, declining to be identified due to the sensitivity of the matter.
"How the money will be exchanged will be further discussed with Iran," the source said.
Iran will soon receive a second instalment of previously frozen oil monies under the interim nuclear agreement, the official IRNA news agency reported on Thursday, citing the country's central bank chief.
The official, Valiollah Seif, did not say where the funds would be coming from.
The tough sanctions slapped on the OPEC member in 2012 had closed the option for buyers of Iran's crude to transfer money to settle their oil payments, putting a stranglehold on the nation's revenues and crippling its economy.
The Iranian central bank held up to $5.6 billion in two won-denominated accounts at Woori Bank and Industrial Bank of Korea, both state-owned, as of late 2013, according to a source last month.
Another source said: "It is likely that Woori will transfer the money to Iran after receiving some from IBK."
Woori and IBK spokesmen declined to comment on the money transfer. Bank of Korea and South Korean finance ministry officials also declined to comment.
Until the interim deal, Iran's importers were required to steadily reduce purchases to qualify every six months for a waiver from U.S. sanctions.
Iran's top four oil clients - China, India, Japan and South Korea - together cut oil imports from Iran by 15 percent to an average of 935,862 barrels per day (bpd) in 2013, government and industry data showed.
The interim agreement in November allows the OPEC member to keep exports at the current reduced levels of about 1 million bpd, and opens a door for lifting shipments later.
Asian buyers increased purchases of Iranian crude by 22 percent in January from a year ago as the grip of sanctions loosened following the November deal. (Reuters)