Minister of Industry: "Measures to Save Refiners Including Reduction of Rental Fees for Petroleum Corporation's Storage Facilities"

"Postponement of Petroleum Import and Sales Levy and Customs Payments, Additional Measures Including Negotiation for Exemption of Large-Scale Petroleum Storage Facility Opening Inspections Beyond Strategic Reserves"

The photo shows Seong Yun-mo, Minister of Trade, Industry and Energy, giving opening remarks at the "Automotive Industry Meeting for COVID-19 Response" held on the 21st with domestic automobile manufacturers and parts companies./Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Moon Chaeseok] The government announced that it will introduce additional measures, including reducing rental fees for Korea National Oil Corporation's storage facilities, as the combined operating losses of the four major refiners?SK Energy, GS Caltex, Hyundai Oilbank, and S-Oil?are estimated to reach 3 trillion won in the first quarter.

On the 22nd, Minister of Trade, Industry and Energy Sung Yun-mo held a meeting with representatives of the four refiners at the Korea Trade Insurance Corporation in Jongno-gu, Seoul, where he made these remarks.

The meeting was attended by government officials including Minister Sung, SK Energy President Cho Kyung-mok, GS Caltex President Heo Se-hong, Hyundai Oilbank President Kang Dal-ho, S-Oil President Ryu Yeol, Korea National Oil Corporation President Yang Soo-young, and Energy Economics Institute President Cho Yong-sung.

Minister Sung stated that the government plans to continue identifying and providing possible support measures.

Specifically, the government plans to implement ▲a temporary reduction in rental fees for Korea National Oil Corporation's storage facilities ▲a 2-3 month payment deferral for quality inspection fees by the Petroleum Management Service ▲a postponement of mandatory inspections for large-scale petroleum storage facilities (under consultation).

So far, the government has announced and implemented support policies for the refining industry, including ▲a 90-day deferral of petroleum import and sales surcharges ▲a 2-month deferral of customs payments ▲leasing of surplus storage facilities by the Korea National Oil Corporation ▲early and additional purchases of strategic petroleum reserves.

The refining industry expressed that it has suffered significant damage due to the sharp decline in global oil demand caused by the COVID-19 pandemic. The export ratio of the domestic refining industry was as high as 55% last year.

Therefore, the domestic refining industry is concerned that difficulties will continue for some time and requested the government to continuously review support measures.

However, the industry evaluated that government support policies such as tax payment deferrals have been helpful. The industry also reported efforts to reduce operating rates and cut expenses as self-help measures.

Minister Sung said, "We are in close communication with related ministries regarding the industry's requests," adding, "We plan to continue discussing additional necessary measures based on the effects on public welfare and the business conditions of the petroleum industry."

The Energy Economics Institute forecasted the international oil price this year at around $38.48 per barrel. This estimate assumes that OPEC+ (the Organization of the Petroleum Exporting Countries and 10 major oil-producing countries) maintains production cuts and that global demand recovers moderately, so actual international oil prices could be lower.

Even under this scenario, the domestic and international petroleum industries are expected to face difficult business conditions through the second quarter. A gradual recovery is projected only in the second half of the year.

The Energy Economics Institute suggested that, starting in the second half, as global oil companies are expected to pursue new responses such as business diversification and new investments, the domestic petroleum industry should also seek innovative business strategies to maintain global competitiveness.

Minister Sung emphasized, "We are fully aware of the severe crisis currently facing the refining industry," and added, "We will continue to actively support the industry's efforts to overcome the crisis and maintain competitiveness."

This content was produced with the assistance of AI translation services.