The Korea Petroleum Association announced on July 24 that the petroleum product export volume of the four major domestic refiners—SK Energy, GS Caltex, S-OIL, and HD Hyundai Oilbank—amounted to 245.3 million barrels in the first half of this year, surpassing the previous record of 237 million barrels set in the first half of 2018, marking the highest level in six years. This milestone highlights the robust performance of South Korea’s refining industry amid a global rise in demand for petroleum products.

According to the association, the first-half petroleum product export volume increased by 7.3% compared to the same period last year, continuing a three-year growth trend since the 2021 pandemic. In terms of export value, it increased by 9% year-on-year to $23.76 billion (approximately 32.92 trillion won), ranking third among the country’s major export items after semiconductors and automobiles. “This represents 59% of the crude oil import cost of $40.4 billion being recouped through exports, significantly contributing to the government’s goal of achieving $700 billion in export revenue,” stated the Korea Petroleum Association.

Diesel was the most exported petroleum product, accounting for 40% of the total export volume, followed by gasoline (23%), jet fuel (18%), and naphtha (8%). By country, the export volume rankings were Australia (18.6%), Singapore (13.0%), Japan (11.5%), China (9.0%), and the United States (8.7%). Notably, Australia has been the largest export trading partner for three consecutive years due to increased exports of high-value-added products such as diesel and gasoline. Additionally, Japan experienced the largest increase in export volume and value, with gasoline and jet fuel exports to Japan increasing by 51% and 70%, respectively.

Japan’s surge in demand is attributed to gasoline supply disruptions and a shortage of jet fuel due to the consolidation of refineries a decade ago as part of its decarbonization and energy-saving efforts, coupled with a surge in foreign tourists due to the recent yen depreciation. Domestic refiners quickly expanded exports to Japan to meet this demand.

This export increase is attributed to domestic refiners responding to the global rise in demand for gasoline and jet fuel by increasing their operating rates. The operating rate of the domestic refining industry in the first half of this year reached 80.0%, steadily rising from 72.6% in the first half of 2021. However, the refining industry has faced difficulties with deteriorating refining margins due to increased petroleum product exports from countries like China and India in the second quarter of this year. According to the International Energy Agency (IEA), Singapore’s refining margin in the first quarter was around $10.0 per barrel but sharply declined to $4.8 in the second quarter.

Source: Businesskorea