South Korean refiners, oil companies meet on Iran supply fears

South Korean refiners, oil companies meet on Iran supply fears

Seoul (Platts)--17Apr2006

South Korea's energy minister Chung Sye-Kyun convened a meeting Monday
with chief executives of local refiners and energy-related companies to
discuss ways to shield the oil import-dependent economy from the impact of
rising crude prices.

They expressed concern that supplies from Iran, the world's fourth
largest oil producer, might be disrupted by an international confrontation
over its nuclear program.

South Korea bought 70.8 million barrels of crude from Iran last year,
8.4% of its total imports of 843.2 million barrels. Some 689.4 million barrels
or 81.8% came from the Middle East, the highest level in 24 years, posing more
supply disruption risks in case of instability in the volatile region.

"Dubai oil prices, which averaged $49.37 per barrel last year, reached a
record $63.63 per barrel last week," the minister of commerce, industry and
energy, said in the meeting. Chung predicted oil prices were highly likely to
continue to rising this year on worries over supply disruption in the Middle
East.

"The government would take measures to reduce the country's oil
consumption if the crude prices keep rising," Chung said. "Compulsory
energy-saving measures will be necessary if supplies from Iran are disrupted."

Chung said the government and local refiners were also ready to release
their oil stockpiles in case of any supply disruptions. He said the government
and refiners currently hold 149.5 million barrels in strategic oil reserves,
worth 111 days of supply.

The refiners said they would make more efforts to secure oil supply.
Longer term, they would also make more investments to improve their heavy
oil-upgrading RFCC (residual fluid catalytic cracking) facilities.

Largest refiner SK Corp, which imports 11.4% of its crude from Iran, said
it could not reduce its procurement from the country this year because the
refinery signed a one-year import deal at the end of last year. "We make
crude import contracts with Iran on a one-year basis. We renewed the contacts
at the end of last year for this year's import," a company official said.

The energy meeting was attended by the country's five oil refiners -- SK
Corp, GS-Caltex, S-Oil, Hyundai Oilbank and SK Incheon Oil -- and state-run
companies including Korea National Oil Corp, Korea Gas Corp, and Korea
Electric Power Corp that supplies more than 95% of the country's power.

South Korea, the world's fourth-largest crude buyer, imported a total of
843.2 million barrels of crude oil last year, up 2.1% from 827.5 million
barrels it bought in 2004. It is expected to import 884 million barrels of
crude oil this year, up 4.8% from 2005. The energy-poor country imports
almost all of its crude requirements.

For more information, take a trial to Platts Oilgram News at
http://oilgramnews.platts.com.

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.