[Q&A] Ministry of Trade, Industry and Energy: "Naphtha Export Restrictions to Be Implemented This Week"

Ministry of Trade, Industry and Energy Holds Daily Briefing of "Middle East Situation Response Headquarters"

Measures Include Naphtha Supply Monitoring and Ban on Hoarding

The government has decided to implement export restrictions on naphtha this week in response to a domestic shortage. The purpose is to ensure that the volume of naphtha exported overseas by domestic refiners is instead supplied to the domestic market.

On March 24, Yang Kiwook, Director of the Industrial Resource Security Office at the Ministry of Trade, Industry and Energy, stated during the daily briefing of the "Middle East Situation Response Headquarters" held at the Government Complex Sejong, "We are preparing measures to adjust the supply and demand of naphtha in preparation for the prolonged situation in the Middle East. This week, we plan to proceed with administrative procedures for related measures, including export restrictions, reporting of production and import volumes, and a ban on hoarding."

On the 24th, Yang Kiwook, Director of the Industrial Resource Security Office at the Ministry of Trade, Industry and Energy, is giving the daily briefing of the "Middle East Situation Response Headquarters" held at the Government Complex Sejong. Ministry of Trade, Industry and Energy

The Ministry of Trade, Industry and Energy believes that the implementation of these measures will help alleviate concerns about shutdowns at petrochemical companies. Director Yang said, "Naphtha is mainly exported by refiners, but by restricting exports and supplying it to domestic petrochemical companies, it will help increase the operating rate of these companies. At the same time, we are working to include a budget in the supplementary budget to support alternative imports of naphtha."

The following are the main points from the Q&A session between the press corps and Director Yang.

▲Which products are affected by a naphtha supply shortage?

=In practice, we are prioritizing where the (naphtha supply shortage) problem occurs and, for each relevant ministry, identifying the inventory status and how tight the supply is for their respective items. We plan to set priorities and examine the supply chain to resolve issues accordingly. We believe that polypropylene (PP), used in home appliances, and synthetic resin (ABS) require close monitoring, and we are also responding to the ethylene used for cutting in the shipbuilding sector.

-▲Naphtha prices are rising.

=Naphtha prices are fundamentally rising globally, which means higher prices when importing naphtha and, consequently, higher costs for refiners producing naphtha. Regarding supply and demand stabilization, there are penalty regulations for hoarding, including a possible cancellation of business registration for major operators.

▲What about the second announcement of the oil price ceiling?

=The second announcement of the price ceiling is scheduled for this week, and we are preparing for it. We intend to revise the announcement after considering various circumstances. Rather than mechanically reflecting international prices, we aim to provide predictability so prices do not spike or plummet abruptly. We are preparing to revise the announcement to meet this goal.

▲How have gasoline and diesel sales volumes changed before and after the implementation of the price ceiling?

=Since gasoline and diesel sales volume figures are not compiled in real time, we looked at the weekly sales volumes for the three days from March 13 to 15, when the first announcement was made, and saw a decrease in sales. However, we believe it is necessary to monitor for a longer period, at least through this week, to properly assess the impact. Once these figures are available, we will release them to determine whether volumes have increased or decreased following the implementation of the price ceiling.

▲The United States has decided to allow limited sales of Iranian crude oil. What is the likelihood of Korea importing Iranian crude oil?

=The possibility of importing Iranian crude oil is open, but we believe the likelihood of actual imports is low. First, the volume is limited, and there are challenges with payment settlements, so companies view this as a risk. For now, we judge the likelihood to be low.

▲When will the emergency crude oil imports from the United Arab Emirates (UAE) arrive in Korea?

=Since the crude oil is being shipped by vessel, it is difficult to specify an exact date. However, we understand that the first vessel will arrive around April 10. After that, crude oil will be supplied through Fujairah Port, and shipments will arrive sequentially depending on the shipping schedule.

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