South Korea and India to Strengthen Cooperation on Naphtha and LNG Supply Chains

Minister of Trade, Industry and Energy Kim Jungkwan and Indian Minister of Commerce and Industry Piyush Goyal take a commemorative photo after exchanging a memorandum of understanding (MOU) to establish the Industrial Cooperation Committee at the state guesthouse in New Delhi, India, on the 20th (local time), in the presence of President Lee Jae-myung and Prime Minister Narendra Modi. Photo by Yonhap News.

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South Korea and India have agreed to strengthen cooperation in energy and resource supply chains, including naphtha, as well as in shipbuilding and marine industries, in a move to jointly respond to supply chain instability originating from the Middle East.

The Ministry of Trade, Industry and Energy announced on April 20 that Minister Kim Jungkwan met with Hardeep Singh Puri, India's Minister of Petroleum and Natural Gas, on the occasion of the Korea-India summit, to discuss follow-up cooperation measures in the energy, resource, and transportation sectors.

Both sides agreed to jointly respond to global supply chain crises based on the "Korea-India Joint Declaration on Energy and Resource Security," which was released as an annex to the summit joint statement. The ministry highlighted the significance of this declaration as it marks the first high-level bilateral cooperation in the energy and resource sector initiated by South Korea since the Middle East war.

The two countries also reaffirmed their existing cooperation in the oil and chemical industries. India is South Korea's fifth-largest naphtha supplier, accounting for 1.3 billion dollars (2.11 million tons) in imports last year, while South Korea is the number one exporter of base oil to India. Furthermore, both South Korea and India are the world's third- and fourth-largest LNG importers, respectively, making them key demand countries in the global gas market.

In light of the increased uncertainty surrounding the Strait of Hormuz due to the recent Iran war and other factors, both sides agreed to maintain a stable supply chain for naphtha and petrochemical feedstocks. In the LNG sector, they will work to enhance market stability and transparency through cooperation among major consuming countries and more actively reflect the interests of buyers.

The ministry specifically requested that India secure naphtha for Korean petrochemical companies and establish a mid- to long-term supply cooperation framework. As discussions on naphtha transactions between local companies such as Indian Oil Corporation Limited (IOCL) and Korean firms are currently underway, the ministry also called for cooperation from the Indian government.

Additionally, the two countries discussed ways to support Korean companies in expanding their supply to meet the growing demand for petrochemical products in India. This is expected to help both countries address vulnerabilities in their respective supply chain structures.

Cooperation in the shipbuilding sector will also proceed in parallel. Taking into account India's desire for self-sufficiency in transport, the two sides agreed to promote shipyard modernization, workforce development, and technology cooperation.

The Ministry of Trade, Industry and Energy and the Ministry of Petroleum and Natural Gas of India plan to hold working-level consultations in the near future to translate the outcomes of the summit into concrete business projects and further specify cooperation tasks.

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