September 4, 2008
South Korea Launches Northeast Asian “Oil Hub” Project
Text of report in English by South Korean news agency Yonhap
[Yonhap headline: "S Korea Launches Northeast Asian 'Oil Hub' Project" by Lee Joon-seung]SEOUL, Sept. 4 (Yonhap) - South Korea on Thursday officially launched an ambitious Northeast Asian oil holding and trading hub project which is expected to generate new business opportunities and fuel related industrial growth, the government said.
The Ministry of Knowledge Economy said foreign companies will invest US$271 million to expand oil storage facilities located in Yeosu, 455 kilometres south of Seoul, which are owned by the state- run Korea National Oil Corp (KNOC).
The money will be used to develop 211,000 square-meters of unused land to allow 6 million tons of oil to be stored, the ministry said. The project involves the construction of 57 new bunkers and three new docks.
KNOC, SK Energy Co., GS-Caltex Co., Oiltanking Asia Pacific and Glencore Singapore have also agreed to take part in the development scheme.
The venture, tentatively named Oiltanking-KNOC Yeosu Co., will be jointly run by KNOC and Oiltanking, with South Korean partners including SK Energy and GS-Caltex holding a 51 per cent stake.
The construction plan is a key part of a pilot project to transform South Korea into a hub for the storage, transportation and trading of oil. The plan is expected to trigger demand for more extensive petroleum refining and holding facilities, as well the establishment of a market able to facilitate the buying and selling of oil.
It is hoped that such developments will help the country become a regional version of oil hubs like Singapore's Jurong Island, the Gulf Coast of the United States and the so-called ARA centres in Europe, which stand for Antwerp, Rotterdam and Amsterdam.
Experts say that by expanding the country's oil holding facilities to 28 million barrels around Yeosu and Ulsan, South Korea has the potential to become an independent regional centre.
South Korea sits 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.
The northeast asian countries of South Korea, Japan, China and Taiwan account for 19 per cent of crude oil consumption.
South Korea currently refines up to 2.85 million barrels of crude a day and has an excess capacity of 715,000 barrels that can be used to make products for trade.
Originally published by Yonhap news agency, Seoul, in English 0259 4 Sep 08.
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