April 19, 2012 [The Korea Herald] - The Korea National Oil Corporation’s ambitious scheme to develop Yeosu, South Jeolla Province into an oil hub of Northeast Asia comparable to Europe’s ARA (Amsterdam, Rotterdam and Antwerp) and Singapore’s Jurong Island has finally begun to proceed smoothly.
An oil tank terminal with a capacity to store 8.2 million barrels of crude oil and petroleum products is under construction in Yeosu.
Oil Hub Korea Yeosu, a subsidiary of the KNOC, raised 360 billion won ($316 million) by issuing corporate bonds in late March and hedged the entire amount against currency risks, completing the groundwork for stable management, the state-run oil developer said.
The KNOC has prepared for the project to make Korea the Northeast Asian center of petroleum trade for about a decade.
The company began to seek revenue by using its petroleum storage facilities and oil reserves without undermining the original purpose of strategic stockpiling.
As it successfully led kinetic stockpiling projects, the KNOC recognized that Korea, with its internationally important status in petroleum consumption, refining and exports, had high potential for the oil storage business, and initiated the oil hub plan.
World-renowned tank terminal companies and oil traders showed great interest and expressed their wish to participate in the project.
In 2008, the KNOC established the joint venture Oil Hub Korea Yeosu with Oiltanking, the world’s No. 2 operator of storage facilities for petroleum and petrochemical products; Glencore, the world’s top raw material trading company; SK Energy and GS Caltex.
Based on its experience in international joint oil reserve programs, the KNOC brought in China Aviation Oil, Samsung C&T and LG International Corp. as new shareholders late last year and inked a deal to use 60 percent of the storage facility’s capacity for eight years.
The company raised funds by issuing commercial papers late last year in close cooperation with Hyundai Engineering & Construction which is building the facility.
To establish a full-fledged Northeast Asian oil hub, the KNOC is pushing for construction and operation of an oil storage facility with an initial capacity of 9.9 million barrels in Ulsan, South Gyeongsang Province, in addition to the Yeosu project.
For this, the KNOC signed a memorandum of understanding for collaboration with the world’s leading petroleum and chemicals tank terminal service provider Vopak in March.
The envisioned Ulsan facility is already highly appreciated for its strategic location which is close to the refineries of SK Energy and S-Oil.
Once the Ulsan storage facility reaches its final target capacity of 2.789 trillion barrels, it is projected to induce 4.46 trillion won in production and create jobs for 22,000 people, the KNOC said.
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