[Anchor]
With no clear resolution in sight for the situation in the Strait of Hormuz, efforts are already underway to secure crude oil from various regions beyond the Middle East. A domestic refinery has brought in ultra-light crude from Australia for the first time, though challenges reportedly exist because South Korea's petrochemical production facilities are tailored to Middle Eastern heavy crude.
Reporter Park Jaehyeon has the details.
[Reporter]
A 110,000-ton class oil tanker has docked at Incheon North Port.
It is carrying ultra-light crude from an Australian gas field, secured by a domestic refinery that participated from the drilling stage.
The 300,000 barrels of ultra-light crude aboard this vessel will be transferred through pipes to storage facilities before undergoing the refining process.
This marks the first time that ultra-light crude produced by a private company has been brought into South Korea.
[Park Joon-young / Manager, SK Innovation Communications Division: Because ultra-light crude has a higher degree of lightness compared to regular crude, it can produce a variety of products such as naphtha, which serves as a raw material for petrochemical products, as well as aviation fuel, kerosene, and diesel...]
Normally, produced crude is sold to neighboring countries to reduce transportation costs. However, following the crude oil and naphtha supply crisis caused by the blockade of the Strait of Hormuz, the decision was made to bring this newly produced ultra-light crude into the country.
While supply diversification is underway, the proportion of Middle Eastern crude still exceeds 60 percent by a wide margin.
Middle Eastern crude is mostly sticky heavy crude, which contains more impurities than light crude and requires advanced refining technology.
The South Korean refining industry has historically grown by importing inexpensive heavy crude from the Middle East, refining it multiple times, and exporting petrochemical products at higher prices.
As a result, a significant number of facilities are optimized for refining heavy crude. Since most crude oil from North America, Europe, and Australia is light crude, large-scale imports are not easy.
[Kim Tae-hwan / Head of Petroleum Policy Research Department, Energy Economics Institute: When running crude oil that is not optimized for those facilities, it leads to a drop in economic feasibility. Consequently, price competitiveness would effectively fall below that of products made in China or Japan.]
To overhaul facilities for importing more light crude, the industry estimates that it would take several months and cost up to trillions of won.
Experts advise that along with supply diversification, a policy approach is also needed to encourage the refining industry to upgrade its facilities.
(Video by: Park Jin-ho | Video Editing by: Chae Cheol-ho | Design by: Choi Ha-neul | Photo courtesy of: SK Innovation)
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