Government Issues 'Caution' Crisis Alert for Oil and Gas, Strengthens Supply Response

On the 1st, government officials including Moon Sinhak, Vice Minister of Trade, Industry and Energy, held the 2nd Real Economy Inspection Meeting at the Korea Trade Insurance Corporation's main conference room in Jongno-gu, Seoul. Ministry of Trade, Industry and Energy.

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On March 5 at 3:00 PM, the government issued a "Caution" alert for resource security concerning the oil and gas sectors.

The resource security crisis alert operates on four levels: Caution, Attention, Warning, and Severe. The alert is issued in accordance with the Special Act on National Resource Security after a comprehensive assessment of the severity of the crisis, the potential impact on public life, and the national economy.

The Ministry of Trade, Industry and Energy has held three rounds of "Middle East Situation Real Economy Inspection Meetings" chaired by the Minister and Vice Minister, and on March 3, upgraded the existing Emergency Response Team to the Middle East Situation Response Headquarters to review oil and gas supply, as well as the status of contingency plan preparations. Additionally, the Ministry is conducting daily assessments of the impact and response measures for key industries such as trade, logistics, petrochemicals, plants, and export-oriented small and medium-sized enterprises.

The inspection results showed that, so far, there have been no direct disruptions to the domestic energy and resource supply. The government has secured reserves in excess of the legally required amount, and has diversified its supply sources, leading to the assessment that short-term supply capacity is sufficient.

However, considering the possibility of rapidly changing conditions in the Middle East, the government explained that it issued the "Caution" level alert to proactively activate contingency plans in accordance with the crisis management manual. The Ministry of Trade, Industry and Energy has been holding daily situation assessment meetings chaired by the Director-General for Resource Industry Policy since the situation began, in response to the heightened risk of supply disruptions for key resources such as oil and gas, which have high dependence on the Middle East, and has been reviewing the requirements for issuing crisis alerts.

The meeting determined that the heightened instability in key oil-producing and gas-producing countries in the Middle East, the growing concerns over disruptions to transportation due to potential closure of the Strait of Hormuz, and the more than 10% surge in international oil prices and resulting market volatility since the situation began, all meet the criteria for issuing a "Caution" level alert.

The government stated that, although it had already been taking measures above the "Caution" level-including holding inspection meetings, operating the Middle East Situation Response Headquarters, and monitoring oil prices and tanker operations-it officially issued the crisis alert in accordance with relevant regulations to transparently share the current situation with the public.

Accordingly, the government plans to secure additional oil supplies in preparation for a supply crisis, and to strengthen preparations for releasing oil reserves as well as crack down on the oil distribution market. Starting March 6, a special inspection will be conducted to tackle illegal distribution, such as fake oil and short-measure sales. Furthermore, joint inspections by related ministries will be intensified to prevent excessive profiteering in the market.

The government is also preparing for the possibility of escalating the alert to "Attention" if the situation worsens. The Ministry of Trade, Industry and Energy is developing additional supply procurement strategies, including the introduction of overseas production and exercising rights to participate in international joint stockpiling. Detailed release plans, including the transfer of reserves, allocation criteria by industry, and timing of release, are also being prepared to ensure immediate release of reserves in the event of a deepening supply crisis.

In the gas sector, the government is preparing to secure alternative supplies in case imports of liquefied natural gas (LNG) from Qatar are suspended. The Ministry has developed a spot purchase strategy utilizing supply sources from Asia, such as Malaysia, and is also discussing the use of surplus volumes from direct importers for their own consumption to stabilize domestic supply. If necessary, the government is considering prioritizing the introduction of LNG secured from overseas projects in which Korea Gas Corporation holds equity stakes, into the domestic market.

Minister of Trade, Industry and Energy Kim Jeonggwan stated, "Since it is difficult to predict when the situation will end, we will remain vigilant and maintain a fully prepared response posture," adding, "We will prioritize energy supply and stability of the real economy, and take necessary actions in a timely manner to reduce the public's burden and anxiety."

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