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🇰🇷 South Korea /Economy & Trade

South Korea to Implement Emergency Measures for Petrochemical Supply Amid Middle East Tensions

From Hankyoreh · (6h ago) Korean

Translated from Korean, summarized and contextualized by DistantNews.

TLDR

  • South Korea is implementing emergency measures to stabilize the supply of petrochemical raw materials like ethylene and propylene due to Middle East instability.
  • The government plans to increase the operating rate of naphtha cracking centers (NCC) to 70% and is considering measures against hoarding.
  • Middle Eastern countries are reportedly seeking to utilize South Korea's oil reserves, indicating a growing demand for alternative energy routes.

Amidst escalating tensions in the Middle East and the potential disruption of vital shipping lanes like the Strait of Hormuz, South Korea is taking proactive steps to safeguard its critical petrochemical supply chain. The Ministry of Trade, Industry and Energy announced that emergency measures will be implemented this week to ensure the stable supply of essential raw materials, including ethylene and propylene, which are fundamental to the nation's industrial output.

We are reviewing supply stabilization measures, including a ban on hoarding, within a manageable scope.

— Yang Ki-wook, Director of Industrial and Trade Security OfficeYang Ki-wook stated the ministry's intention to implement measures to stabilize the supply of petrochemical raw materials.

These measures include a potential ban on hoarding and a concerted effort to boost the operational capacity of naphtha cracking centers (NCCs). The ministry aims to raise the NCC operating rate from its current low of 55% to a more robust 70%. This move is crucial given that naphtha supply has already fallen short of normal levels, with an estimated 10% reduction in domestic production by refineries. The government is actively seeking to secure additional naphtha through existing inventories and alternative import routes, with plans to provide financial support for price differentials on imported naphtha.

We plan to increase the operating rate of NCCs to 70% from the current 55%.

— Yang Ki-wook, Director of Industrial and Trade Security OfficeYang Ki-wook explained the plan to boost the production capacity of naphtha cracking centers.

Furthermore, the geopolitical instability has spurred interest from Middle Eastern nations in utilizing South Korea's strategic oil reserves. As countries seek alternative routes for oil exports due to the potential closure of the Strait of Hormuz, South Korea's well-established storage facilities have become increasingly attractive. Discussions are reportedly underway with several Middle Eastern countries, including the UAE, to explore the possibility of using these reserves. This collaboration could not only enhance regional energy security but also potentially lead to an expansion of South Korea's own strategic petroleum reserves.

Many countries want to use our oil reserves as alternative routes for crude oil exports.

— Yang Ki-wook, Director of Industrial and Trade Security OfficeYang Ki-wook highlighted the growing interest from Middle Eastern countries in utilizing South Korea's oil storage facilities.
Source Hankyoreh Original article in Korean

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