Korean Minister of Trade, Industry and Energy Yoon Sang-jick said that the 2013 World Energy Congress in Daegu will act as a lever to promote Korea as Northeast Asia’s oil hub.

“The five-day forum will be a golden opportunity to display Korea’s leadership and to suggest its role in the fast-changing global energy sector,” the minister told The Korea Herald in a recent interview.

During the congress period, Yoon will meet with energy ministers from some 30 countries and representatives of prominent world energy organizations to discuss the top energy issues faced by international society today.

“The key points of discussion will be to improve the current energy supply-demand management system, to promote the use of eco-friendly energy and to reinforce the security level, especially for nuclear energy,” Yoon said.

Recent issues such as shale gas, renewable energy and other new generation sources of energy will also be included in the agenda.

The prime focus for the Korean energy chief is to be the Northeast Asian Oil Hub project, which is part of the ministry’s vision to make Korea into a leading petrochemical industrial complex in the region.

“Considering the importance of oil in the Korean economy, the oil hub plan is a plausible means of consolidating Korea’s position in the world energy sector,” Yoon said.

Korea is currently the world’s eighth-largest oil consumer, as well as the fifth-largest oil importer, and its oil consumption is fully dependent on overseas oil supply. Also, oil is both Korea’s No. 1 import and its top export category, accounting for 20 percent of imports and 9.23 percent of exports.

But it is now time for the country to advance further, moving on from a simple oil trading country to a comprehensive strategic hub.

“Korea has been heavily affected by past oil crises due to its highly oil-dependent industrial structures,” Yoon said.

After experiencing severe difficulties in oil supply during the oil shocks of the 1970s and 1980s, the government established laws on oil stockpiling and built storage facilities.

As a result, Korea has become the world’s fifth-largest oil stockpiler and one of the top International Energy Agency member states in terms of duration of self-sufficiency.

This logistics infrastructure should now be developed into a higher-level hub, incorporating storing space, comprehensive financial services and trading services, the minister said.

“There has been a growing need to establish an oil hub in the Northeast Asian region, as the center of global oil consumption and refinement has shifted from OECD countries to emerging economies,” he said.

“The consumption and trading volumes have been growing visibly in the Asia-Pacific region, especially in developing countries, and it is here that a new oil trading center should be located.”

The Trade Ministry saw this demand as an opportunity to realize “creative economy,” the economic slogan of the Park Geun-hye administration.

“Korea is capable of maintaining a balanced growth of hardware and software, and has a solid connection with global expert companies, including major oil logistics companies,” the minister said.

It is also one of the few countries in Northeast Asia that has sufficient potential as an oil hub and yet has room for further growth, he added.

In order to achieve the goal, however, the country has a number of tasks, such as expanding the current storage facilities, improving the terminal operation rates, and easing regulations.

“Our total storage capacity is expected to increase by 36.6 million barrels by year 2020, among which 8.2 million barrels have already been realized through the kick-off of the Yeosu tank terminal earlier this year,” Yoon said.

The upcoming construction of the Ulsan North Port and the Ulsan South Port will complete the Trade Ministry’s long-term plans and form the oil trading center on the country’s southeast coast.

The government is also working to amend the law to allow partial blending within the oil hub area and to alleviate tariffs and offer tax incentives for traders, according to the minister.

The energy minister expects that the oil hub blueprint will be more widely shared during the Daegu congress period.

“In the fifth Asian Ministerial Energy Roundtable, which was held here in Seoul last month, we confirmed that most participant states agreed to the need for an oil hub in Northeast Asia,” Yoon said.

“The fact that the joint declaration included the clause on establishing a new oil and gas market reflects Korea’s influence in the energy sector.”

By Bae Hyun-jung (tellme@heraldcorp.com)