SEOUL, August 4 – South Korea, the world\’s fifth largest crude importer, Monday announced plans for a regional oil storage hub to create new business opportunities and ensure energy security.
Existing bunker facilities at the southern ports of Yeosu and Ulsan will be expanded to hold a combined 28 million barrels, said the Vice Minister of Knowledge Economy, Lee Jae-Joon.
"South Korea is situated astride the main North Pacific shipping route, with Yeosu and Ulsan possessing deep water ports and proximity to Chinese and Japanese industrial centres that make them ideal choices for the oil hub endeavour," he told a parliamentary meeting.
Lee, quoted by Yonhap news agency, said the project could generate more jobs and greater business for these regions and allow South Korea to retain extensive reserves for emergency situations.
In the first phase, a total of 320 million dollars will be invested to increase storage at Yeosu to six million barrels by December 2011. The government will provide 120 million dollars, with the rest coming from abroad.
"A multinational consortium made up of Korea National Oil Corp., local refiners, international tank terminal operators and crude oil traders are to sign an initial contract within the month, and a joint business venture company is to be set up by October," Lee said.
The state-run oil company will hold a 29 percent stake in the Yeosu oil hub by providing the land.
Detailed plans for Ulsan on the southeast coast will be established later.
South Korea imports all its crude needs. The creation of a hub storage facility would help secure oil security, the vice minister was quoted by his ministry as saying.
An official handling the project said there are no immediate plans to increase current refining capacity of up to 2.85 million barrels of crude a day, which is surplus to domestic needs.
"The oil hub project is not necessarily related to oil refining capacity," he told AFP on condition of anonymity.
"It is basically a business concept of renting out oil storage facilities. Oil products to be stored here can be refined here or elsewhere."