First Blending Export of Petroleum Products from Bonded Area... Regulatory Issues Resolved

Domestic petroleum products that underwent a blending process in a bonded logistics center have been exported for the first time. This achievement was made possible by the government lifting regulations on the refining industry.

On the 29th, the Korea Customs Service announced that domestically blended petroleum products were exported for the first time from Hyundai Oil Terminal, a bonded logistics center located at Pyeongtaek Port.

Goseokjin, Director of the Customs Clearance Bureau at the Korea Customs Service (third from the right), is taking a commemorative photo with HD Hyundai Oilbank officials and others at the blending export site at Pyeongtaek Port on the 29th. Photo by Korea Customs Service

A bonded logistics center is a bonded area designated by the Commissioner of the Korea Customs Service where foreign goods can be manufactured, processed, or undergo logistics operations under a suspended taxation status such as customs duties.

Blending refers to the process of mixing two or more petroleum or petrochemical products to create a final petroleum product. Petroleum products that have undergone blending are sold to end users at international market prices.

However, the refining industry had previously been unable to export petroleum products blended in bonded logistics centers due to complex tax issues and other regulatory reasons.

The ability to export domestically produced petroleum products after blending in bonded logistics centers became possible starting in January, when the Korea Customs Service revised related notifications in cooperation with the Ministry of Trade, Industry and Energy and the National Tax Service as part of regulatory innovation.

Notably, the export of blended petroleum products from Hyundai Oil Terminal is the first case since the regulatory innovation, signifying that domestic refiners have found new business opportunities by leveraging government regulatory reforms including those by the Korea Customs Service.

The exported product is an eco-friendly “bio marine fuel.” This product was created by blending “ultra-low sulfur heavy fuel oil” produced by HD Hyundai Oilbank with “biodiesel” purchased from a domestic company, and was exported as fuel for international trading vessels.

Following this export, HD Hyundai Oilbank plans to continuously produce blended petroleum products in bonded logistics centers and sell approximately 60,000 tons (worth about 60 billion KRW) annually as fuel oil for international trading vessels of Korean shipping companies.

In the future, they expect to expand sales channels to overseas petroleum intermediaries and foreign shipping companies, aiming to export about 400,000 tons (worth approximately 400 billion KRW) annually.

The export of blended domestic petroleum products is expected to serve as a bridge for the domestic refining industry to enter the petroleum product blending market, which has been led by overseas petroleum intermediaries until now.

Above all, considering the international community’s strengthened environmental standards for marine fuel oil, the Korea Customs Service expects that the domestic refining industry’s ability to proactively supply eco-friendly marine fuel blended in bonded logistics centers will lead to securing eco-friendly demand, increased sales, and contributions to greenhouse gas reduction.

Ko Seok-jin, Director of the Customs Clearance Bureau at the Korea Customs Service, stated, “We will ensure that the regulatory innovation for the export of blended domestic petroleum products spreads further in the field,” adding, “We will spare no support to help Korea leap forward as a Northeast Asian oil hub in the future.”

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