Seoul: South Korea on Thursday launched an ambitious project to become Northeast Asia’s oil storage hub, which officials said will create new business opportunities and ensure energy security.
A joint venture contract was signed by state-run Korea National Oil Corp. (KNOC), local refiner SK Energy, GS-Caltex, Oiltanking Asia Pacific and Glencore Singapore, officials said.
KNOC agreed to hold a 29% stake in the joint venture, which will invest $320 million to increase storage at the southern port of Yeosu to six million barrels by 2011.
South Korea, the world’s fifth largest crude importer, also plans to build new storage facilities at Ulsan on the southeast coast.
Details of work there have not been announced but the aim is for Yeosu and Ulsan to hold a combined 28 million barrels.
South Korea imports all its crude needs and officials say the creation of a hub storage facility would help secure oil security.
“This is the first pilot project which has been launched as part of the government’s drive to establish a Northeast Asia oil hub,” the Ministry of Knowledge Economy said in a statement.
“This will help our country find a new growth engine in the sector ... and secure stable (oil) supply at home.”
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.
South Korea, Japan, China and Taiwan account for 19% of world crude consumption.
Officials say there are no immediate plans to increase the country’s current refining capacity of up to 2.85 million barrels of crude a day, which is surplus to domestic needs.