The South Korean government will cut the share of Middle Eastern crude in the country's oil imports to 50% or less by 2035, down from about 70% last year. To prevent domestic factories from halting when raw material supplies are cut off by war or export controls, the government will diversify its crude import sources and expand the list of critical minerals under supply chain management to 51 from 38.
The Ministry of Trade, Industry and Energy convened the sixth Resource Security Council on the 23rd and reviewed and finalized four items: the first Resource Security Master Plan, a revision to the fifth Petroleum Stockpiling Plan, a critical minerals designation plan and the first Critical Minerals Stockpiling Plan. The Resource Security Master Plan and the Critical Minerals Stockpiling Plan are the first statutory plans drawn up since the Special Act on National Resource Security took effect in February last year.
Last year, 61% of the crude oil imported into South Korea passed through the Strait of Hormuz. Even when crude is purchased from several Middle Eastern countries, shipments routed through the same strait can face simultaneous supply disruptions if the sea lane is blocked. The government decided to diversify both supplier countries and shipping routes to reduce this vulnerability, which has come into focus amid recent instability in the Middle East.
The government will also ease shipping cost burdens for refiners importing non-Middle Eastern crude. Through the end of this year, the reimbursement rate for the freight cost gap on crude from the Americas, Europe and Africa will rise to as much as 100% from about 25%. Requirements for a minimum import volume of 4 million barrels and a one-year long-term contract will also be temporarily waived. Reimbursements, however, will be capped at the amount of levies paid during the period.
Over the medium to long term, the government will increase long-term contracts for non-Middle Eastern crude, which has been bought on the spot market as needed. It will also support the conversion and upgrading of refining facilities so they can process a wider range of crude grades.
Oil storage facilities will be expanded by an initial 20 million barrels by 2030. Including existing facilities, the goal is to secure storage capacity equivalent to 60 days of supply based on daily crude demand of about 2.8 million barrels. Spare capacity will be used for joint international stockpiling with oil-producing countries, and condensate, a feedstock for naphtha production, will be stockpiled for the first time.
For natural gas, reliance on any single country will be managed to below the 30% range by 2035. According to data from the Korea Energy Economics Institute, Qatar's share of South Korea's liquefied natural gas (LNG) imports fell to 14.9% last year from 35.5% in 2016. Australia's share, by contrast, rose to 31.4% from 14.0% over the same period.
Thirteen items — including phosphorus, fluorite, germanium and 10 rare earth elements — will be added to the list of critical minerals whose supply chains the state manages, following a revision of the relevant public notice. That will raise the number of critical minerals to 51 from 38. Fluorite is used to make hydrofluoric acid for semiconductors and battery electrolytes, while germanium is a raw material for thermal imaging equipment used in defense and for optical fiber.
The number of items to be actually secured and stored as stockpiles will also rise to 29 from 24, in line with domestic industrial demand. The stockpiling target for minerals with vulnerable supply chains will be raised to up to 365 days from 180 days. The government will introduce a "total national available inventory" concept that covers, alongside public stockpiles, private-sector inventories, materials recovered from sources such as used batteries, and overseas inventories to which usage rights have been secured. The aim is to track volumes held outside government warehouses and supply them to domestic industry in a crisis.
"Resource security is not simply a matter of cost in securing cheap raw materials, but a matter of national survival that protects people's lives and industry," Kim Jung-kwan, minister of trade, industry and energy, said.
