Oil refiners expect plunge in petroleum product exports in 2009

By Lee Joon-seung
SEOUL, Feb. 19 (Yonhap) -- South Korean petroleum product exports are expected to
nosedive this year as weak crude oil prices and the global recession sap demand,
the government said Thursday, citing industry sources.

The Ministry of Knowledge Economy said executives from SK Energy Co., S-Oil Corp.
and the Korea Petroleum Association (KPA) predicted that exports of refined
petroleum products, including gasoline and diesel fuel, will fall to US$18.5
billion this year, down from $36.7 billion tallied for 2008.
The oil companies also told policymakers at a meeting in Seoul that with more
refineries in China, India and Vietnam coming on line, there will likely be
over-capacity in the industry that could raise inventory and cut into profits.
"Local businesses in particular expressed concern that once the refinery being
built by India's Reliance Petroleum starts full-scale production in the second
half, things could become even more difficult," said Lee Dong-geun, head of the
ministry's trade investment office.
He added that companies called on the government to provide more support to help
them deal with the current situation, including changes to existing
administrative rules and greater access to foreign markets.
Refiners say it would be beneficial to them if a tariff-free clause for locally
produced aviation fuel were included in the free trade agreement talks underway
with the European Union (EU).
At present, South Korean-made jet fuel is subject to a 4.7 percent duty, while
some countries ship their products tariff-free to EU members.
Other officials, meanwhile, said they would examine requests made by companies
for refunding of import duties on so-called offgas, a byproduct of the crude oil
refining process that is reused as fuel. Companies claimed that not granting the
refunds placed local firms at a disadvantage compared to their Chinese and Indian
rivals that receive such benefits.
Seoul provides refunds for imported materials and energy resources that are used
in the making of products for re-export abroad.
A ministry insider said the government had not given refunds because it was
impossible to tell if the offgas was used to make export products or for domestic
use.
yonngong@yna.co.kr
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