South Korean energy minister warns refiners on excessive profits

Seoul (Platts)--1May2006

South Korea's energy ministry Monday warned local refiners against
reaping excessive profits by overcharging consumers with oil prices running
high. "It is not desirable for refiners to record excessive profits at a time
when consumers are in difficulties," Commerce, Industry and Energy Minister
Chung Sye-kyun told a local radio program. "The country's antitrust watchdog
is watching closely whether oil companies have colluded to fix prices of
refined oil products," he said.

Oil refiners in South Korea and elsewhere have enjoyed good profits in
recent years as product prices have risen on the back of strong crude prices.
SK Corp, South Korea's largest oil refiner, last week said its profit for the
first quarter jumped 58.8% year on year to Won 610.5 billion ($646.0 million)
on a 10% rise in sales thanks to higher product prices.

South Korea's Fair Trade Commission has been conducting a two-year-long
investigation into the country's oil refiners since August 2004. The inquiry
includes a probe into suspicions of price gouging.

South Korea's energy-intensive manufacturers are vulnerable to rises in
oil prices as the country imports almost all of its crude requirements. Local
oil consumers and the manufacturing sector have called for tax reductions on
products to lower their domestic prices. Taxes account for more than 60% of
South Korea's gasoline price.

Chung, however, dismissed the calls for tax cuts. "The government has no
plan to lower local taxes on oil and oil products because lower taxes could
hamper a government campaign to save energy consumption," he said.

South Korea, the world's fourth largest crude buyer, imported 844.1
million barrels of crude oil last year, up 2% from 827.5 million barrels in
2004. Imports are expected to rise 4.8% to 884 million barrels in 2006.

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