By Jane Han
Staff Reporter
A major oil trading hub, similar to that of Singapore, will be created in the southern port cities of Yeosu and Ulsan by 2012, as part of the world's fifth-largest oil importing nation's protective measures against fluctuating crude prices, a senior government policymaker said Monday.
Currently, Singapore is Asia's biggest and the world's third-largest oil trading center, where traders bring in oil products in large crude carriers to be stored and sold. Vice Knowledge Economy Minister Lee Jae-joon said South Korea could play this role in Northeast Asia.
``South Korea is situated astride the main North Pacific shipping route, with Yeosu and Ulsan possessing deep water ports and proximity to Chinese and Japanese industrial centers that make them ideal choices for the oil hub endeavor,'' he said at a parliamentary hearing.
Lee said extensive petroleum refining, shipment, storage and trading capabilities are necessary in order to transform into the Northeast Asian ``oil hub.''
He said existing bunker facilities in Yeosu and Ulsan will be expanded to hold a combined 28 million barrels of crude.
The preliminary step for the project will kick off in October, when a multinational consortium including the state-run Korea National Oil Corp., local refiners, international tank terminal operators and crude oil traders are set to establish a joint venture, according to the official.
Then, a total of $320 million ― of which the government will foot $120 million ― will be invested to build an additional storage facility with a capacity of 6 million barrels by 2011, with operations to begin by March 2012.
The policymaker said the operations will allow South Korea to retain extensive crude oil reserves that can be tapped in emergency situations.
The need for a Northeast Asian oil trading center rose, as the Singapore hub mainly serves the Southeast Asian region. Korea, China, Japan and Taiwan currently take up about 19 percent of the world's oil consumption.