South Korea Encourages Diversified Oil Imports
South Korea departments of trade, industry and energy disclosed recently that the government would provide domestic refiners with subsidies to encourage them to import crude oil outside Middle East Region. Influenced by political uncertainty in that area, South Korean government is trying to realize the diversification of oil import sources.
An official said that South Korea is greatly affected by the price fluctuations of international oil. About 85% of its oil is imported from the Middle East. However, most of the oil is shipped to South Korea through Straits of Melaka, where pirates cause big trouble. The government has decided to provide refiners with financial subsidies to reduce their transportation cost.
The South Korea government has approved the revised bill and adds stimulus measures. According to the new policy, government will give subsidies to refiners if they import crude oil
from the Americas, Africa and Europe to make up the freight difference from the Gulf and other areas. At present, refiners should pay 1600 won ($1.6) of tariffs for 100 litres crude oil and get the same amount of tax rebates when exporting oil products. That means refiners which imported crude oil outside Middle East Region will enjoy dual interests, including transportation cost subsidies and tax rebates.
South Korea refiners said that they had been stimulated by the new policy and would seek more oil sources from non Middle East countries. YooJung-Min, the spokesman of SK, said: “We are pushing more crude oil imports from Australia, Russia and Indonesia, but the risk is not merely transportation costs for Middle East crude oil is more suited to our refining facilities.”
According to the statistics of South Korean national oil company, South Korea imported 790.58 million barrels of crude oil from the Middle East, accounting for 86.4% of its total imports. In the previous five months this year, South Korea has imported 308.78 million barrels from the Middle East, which is accounted for 83% of its 372.08 million barrels of total crude oil imports.