South Korea gets a majority of its oil (70%) from the Gulf Region. The South Korean government has been sending envoys to Algeria, Oman and Saudi Arabia to secure alternate sources of crude oil
I would think South America (Venezuala, Guyana) would also offer options.
Maybe to diversify for “someday”. But nobody is sitting on production facilities that are capable of ramping up 50% overnight - or they would have already been doing it. When there’s a shortage, there’s a shortage. It can be ameliorated a little - short term - with strategic reserves (we’re not the only country that does this) but longer term, ::: price rise :::.
I don’t disagree. I suspect none of the deals or arrangements, whether by South Korea, or anyone else, has a long term flavor. I think most of the arrangements will be short term in nature.
Malaysia is a major producer in the area. Why not get more there.
I suspect most of Malaysia’s current production is spoken for i.e. it already has standing agreements to send its oil production as exports to Japan, Thailand, Australia, and some to South Korea.
On a separate note, three VLCCs managed to get out of MEG last week. I think two were bound for China. Not sure on the third VLCC.
Yes, and thar is why oil prices rise due to Straits of Hormuz problem.
An operating oil refinery is a license to print money. Keep it running and sell the products and you will continue making money especially when you can pass along price increases to customers.
You probably have a contract with an oil supplier or suppliers. But when shipments are delayed you are forced to bid for oil on the spot market. There you compete with everyone else and no one wants to shut down their refinery. How high will you bid?
Does your supply contract have a cost escalator? Probably. If not how high can prices go before you decide to sell on the spot market. Chaos. Long term relationships can be threatened. And how much can oil producers boost production when premium prices are available.
These news items probably won’t affect petroleum needs, but they may help to reduce the demand for natural gas in South Korea. The country gets around 25% of its electricity from gas.
South Korea is starting up two large nuclear power plants.
A new unit at Saeul is starting up…
Here is the electricity fuel mix for South Korea.
Image from the International Energy Agency here.
_ Pete
