The government unveiled a strategy to lift up two Korean ports as an oil hub of Northeast Asia. The government announced plans to establish 'Oil Hub of Northeast Asia' on Mar.12 in a joint-session of 5th Trade Investment Promotion Meeting together with Regional Development Committee.

The oil hub is defined as an international center for petroleum business of high added value including oil deals, related logistics and financial service on the back of oil refinery, oil production and oil storage. Of late, the Northeast Asia covering Korea, China and Japan emerged the world's largest and most attractive petroleum products market, persistently raising a question of the need to construct a new oil hub in Northeast Asia amidst current charges in the international climate of petroleum and petroleum products supply and demand whereby Singapore's role as the oil hub in Northeast Asia is being diminished.

Korea is assessed as a most appropriate country in forming a new oil hub in the light of various factors. The ports have good geopolitical positions linking Korea-China-Japan ; they possess a good number of oil refinery plants on a world-scale; they have good conditions such as deep draft and other natural advantages. In order for Korea to boost itself as one of the four world's oil hub countries, it is deemed necessary to set up a national strategy at the government level in a bid to build infrastructure for commercial petroleum storage, to ease restrictions to petroleum production and transport, to attract petroleum traders, and to upgrade the performance of financial players.

In such a circumstance, the government has been driving a plan to "Build an Oil Hub in Northeast Asia,"focusing around on Ulsan and Yeosu of Korea where commercial storing facilities are actively being built so that Korea can be developed as the center for petroleum transactions and for related finance with the two ports revitalized with intermediate oil trades in the Northeast Asia.

In a move to create a new Korea's national image by 2020 as an energy trading hub in the Northeast Asia, the Korean government's plan aims to make new employment through creative integration of energy logistics with finances, to have Korea leap into an advanced trading country of the world-top class, and to aggressively relax its various trade restrictions.

The government is set to implement the plan split into four areas namely ▲expansion in commercial oil storages, ▲relaxation in oil trade restrictions,▲incentives to attract oil traders ▲creation of financial infrastructure related with oil trading

The government's plan calls for construction of oil tank terminal by investment of two trillion won in private investment for storing capacity of 36.6 million barrels, capable of annually handling maximum up to 400m barrels by 2020. Oil Hub Korea Yeosu Co.,Ltd.(OKYC)established at Yeosu, Korea has completed construction of a tank terminal, commencing its operation since Mar. 2013, capable of storing 8.2m barrels in total including crude oil of 3.5 m barrels and petroleum products of 4.7m barrels.

The government's plan also calls for constructing a tank terminal at Northem Port of Ulsan with a storing capacity of 9.9m barrel of petroleum products along with berths by 2016, and for building, under the detailed plans, logistics infra facilities at Southem Port of Ulsan with storing capacity of 18.5m for completion by 2020, related with the Northern Port's projects of Ulsan. Besides, the government is planing to further lend its state-owned storage facilities to the private operators, enabling Ulsan to additionally level up its oil storing facilities up to a level of 20m barrels in excess of Singapore's oil storing capacity ranking 3rd in the world.

The economic spillover effect from the government's planned construction of oil hub in the northeast Asia will reach 3.6 trillion won in the short-term and 60 trillion won in the long-term. From 2020 onwards, the increase in Korea's exports of petroleum products is expected to annually reach about $25 billion or more. Also, petroleum-related industries including refinery-processing of brought-in crude oil, acquisition of port's infrastructure facilities and others will make good development, and will likely contribute to strengthening petroleum security at home and abroad through efficient supply demand of petroleum and petroleum products in balance and by saving indirect cost.

By successfully building Korea as an oil hub in the Northeast Asia, the government would induce the creative integration of energy logistics with finances so that Korea's economy can be made creative in energy field and Korea can become an advanced trading country of the world-top class, a government official said.