January 8, 2014 [Platts] - State-run Korean National Oil Corp, independent tank storage provider Vopak and refiner S-Oil signed an agreement Wednesday to form a joint-venture for building an oil storage terminal in the South Korea's southeastern coast, the Trade, Industry and Energy ministry said in a statement.
The JV will spend Won 622.2 billion ($584 million) to build an oil storage terminal with a capacity of 9.9 million barrels of refined products in South Korea’s southeastern port of Ulsan by 2017, the ministry said.
Heads of the three companies met in Seoul to establish the JV – Korea Oil Terminal Co. Ltd. The event was attended by South Korea’s Minister of Trade, Industry and Energy Yoon Sang-Jick.
KNOC has a 51% stake in the JV, with Vopak holding 38% and S-Oil 11%. Two or three foreign firms are expected to join the joint venture by purchasing some stakes from KNOC and Vopak, the ministry said.
In October last year, KNOC president and CEO Suh Moon-Kyu told Platts that China’s Sinopec would join the venture. “Potential users of the Ulsan storage terminal can benefit from the shorter voyage from Canada, in particular,” Suh had said then.
When completed in 2017, it would be South Korea’s second commercial oil storage terminal. Its first commercial terminal in Yeosu, west of Ulsan, was put online in April with a capacity of 8.2 million barrels — 3.5 million barrels of crude and 4.7 million barrels of refined products.
“The construction of commercial terminal is part of South Korea’s efforts to transform its southern coast into an oil hub for Northeast Asia,” said Kang Kyong-Sung, head of the ministry’s oil industry department.
South Korea is also considering building a third commercial oil storage terminal in Ulsan with a capacity of 18.5 million barrels of crude by 2020, which would boost the country’s total commercial storage capacity to 36.6 million barrels, according to the ministry.
“As part of the oil hub project, the ministry plans to improve infrastructure in Ulsan and Yeosu ports and introduce mechanism for oil trading and petroleum-related financial services,” the statement said.
The country plans to set up an international oil trading market in the first half of 2017, similar to Singapore’s SGX and Dubai’s DME. An earlier study by the state-run Korea Development Institute said the oil hub project would boost the country’s economic output by over Won 4.4 trillion per year and create 22,000 new jobs.
