"Preparing for Prolonged Hormuz Strait Closure"... Government to Utilize Overseas Oil Storage Facilities

Gi-wook Yang, Director of the Industrial Resource Security Office at the Ministry of Trade, Industry and Energy, is conducting the "Daily Briefing of the Middle East War Response Headquarters" at the Government Sejong Complex on the 14th. Ministry of Trade, Industry and Energy.

원본보기 아이콘

With the prolonged Middle East war increasing uncertainty in crude oil transportation, the government has decided to expand national oil storage facilities. The plan aims to strengthen responsiveness by utilizing both domestic storage infrastructure and overseas storage bases.

Yang Kiuk, Director General of the Industrial Resource Security Office at the Ministry of Trade, Industry and Energy, stated during the Middle East War Response Headquarters Daily Briefing on the 14th, "We are currently working to expand our storage capacity by an additional 20 million barrels, bringing the total to around 140 million barrels." He added, "We have included a design budget in the supplementary budget, and will also review the need for further expansion."

Director General Yang further explained, "Recently, Middle Eastern countries have been showing interest in using overseas storage bases to reduce the risks of domestic storage." He added, "Discussions have already taken place with the UAE, and other countries have also expressed interest."

In reality, Middle Eastern oil-producing countries are actively considering storing crude oil in third countries to diversify risks, as their export routes have become restricted due to the closure of the Strait of Hormuz. If Korea's storage facilities are used, Korea can expect the dual benefits of securing stable oil supplies and expanding international joint stockpiles.

The expansion of storage bases is also linked to supply chain response strategies. Currently, instead of releasing stockpiled oil, the government is managing volumes through a swap system with refiners. The amount of oil to be swapped by the four domestic refiners alone totals 32 million barrels. This means that the stockpiled oil is being utilized not just as inventory, but as "liquid assets."

Director General Yang noted, "Stockpiling is not simply about buying oil when prices are low. It is a strategic asset directly tied to securing alternative supplies during crises." He added, "We will continue to strengthen the practical supply stabilization function by linking it to domestic corporate demand."

The government will decide on further expansion based on the results of the storage facility design and will gradually expand joint stockpiling cooperation with Middle Eastern oil-producing countries.

Meanwhile, the instability in crude oil supply remains ongoing. According to the government, oil tanker passage through the Strait of Hormuz has effectively come to a halt. The Red Sea, which is being considered as an alternative route, also faces growing uncertainties, leaving supply chain risks unresolved.

Under these circumstances, alternative supply routes led by Saudi Arabia are being expanded. Saudi Arabia is reportedly shipping up to 5 million barrels per day through ports along the Red Sea coast. Utilizing this, the government has raised the volume of secured crude oil as of May to about 82% of normal levels.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.