Page 12 - AsianOil Week 11 2022

AsianOil EAST ASIA AsianOil

South Korea approves

oil release to take

pressure off refiners

POLICY THE government of South Korea last week gave
the green light to release more than 4mn barrels
of oil from the country’s Strategic Petroleum
Reserve (SPR).
In a statement released by the South Korean
Ministry of Trade, Industry and Energy (MTIE)
just two days prior to the election of new Pres-
ident Yoon Suk-yeol, the outgoing administra-
tion revealed that a total of 4.42mn barrels was
being released. The move comes in a bid to aid
South Korea’s domestic refineries in finding
replacements for Russian crude supplies in the
coming weeks.
The release follows a decision taken earlier
this month alongside the 30 other member
countries of the International Energy Agency
(IEA), who agreed to a co-ordinated release of
60mn barrels of crude from SPRs worldwide.
Addressing South Korea’s release, the MTIE
said: “The decision aims to seek stability in the
energy market both at home and abroad, and
to express our solidarity with the US and other
member nations by sending a message that
energy resources cannot be used as a geopolit-
ical tool.”
There has been some questioning of the move reserves after the most recent release.
at home, though, with one manager at a South On the political front Seoul backs the US and
Korean refinery quoted as saying: “It wasn’t other Western countries in pushing for interna-
entirely necessary for the state to tap into the tional sanctions against Moscow. Some regional
SPR because Russian oil makes up a very small analysts have noted in recent days that Japan, and
portion of South Korea’s overall crude imports increasingly South Korea, are also facing pres-
Since 2019, ... Nevertheless, the 4mn barrels of state reserve sure to reduce or altogether halt purchases and
barrels would more than cover any shortfall in infrastructure investments related to Russian Far
South Korea has Russian crude intake in the near term, and buy East energy sites as the war drags on.
It is understood that to make up any result-
purchased an us enough time to fix other alternative supply ing shortfall on imports going into the summer
deals.”
Since 2019, South Korea has purchased an – with supplies from Russia predicted to end
average of almost average of almost 3.7mn barrels per month of around May – South Korean refineries would
3.7mn barrels per various types of Russian crude. It is thought that turn to African and US suppliers.
In January, South Korea imported over 15mn
supplies of Russian sweet crudes from the Far
month of various East and Black Sea providers could dry up in barrels of US crude, an all-time monthly high.
types of Russian the next 6-8 weeks if Russian aggression against But as the world’s fourth ranking crude importer,
South Korea would have to secure at least two
Ukraine shows no signs of letting up.
South Korean oil reserves at the moment very large crude carrier (VLCC) cargoes per
crude. remain high, however, with the country holding month to replace current Russian imports.
well over the 90 days of strategic reserves rec- Additional cargoes from Alaska and Nige-
ommended by the IEA, albeit with slightly more ria are also being considered. Nigeria in 2021
currently held in private enterprises compared supplied South Korea with a total of 7.3mn
with state facilities. barrels during the calendar year, and over
The MTIE remained typically tight-lipped 9.3mn barrels the previous year. In the process
following the release announcement, refusing the African country became South Korea’s
when asked to confirm actual amounts now third-biggest trading partner, with much of
held, although local analysts believe there to last year’s $2bn in trade made up of Nigerian
be around 89.4mn barrels remaining in state oil and gas shipments.™

P12 www. NEWSBASE .com Week 11 18•March•2022