South Korea Secures 90% of Pre-Iran War Naphtha Supplies for May

SEOUL, April 28 (Yonhap) -- South Korea is expected to secure up to 90 percent of pre-Iran war naphtha supplies for May, the industry ministry said Tuesday, adding that major petrochemical companies are expanding their plant operations in line with inbound supplies.

The plant operation rate of Yeochun NCC, which had declared force majeure for some of its products due to naphtha shortages, has increased to 65 percent as of Friday from 55 percent on April 1, according to the Ministry of Trade, Industry and Resources.

The operation rate of Korea Petrochemical Ind. Co went up to 72 percent from 62 percent over the same period.

Stable supplies of naphtha, a key industrial feedstock used by the petrochemical and various other industries, for next month come amid the government's efforts to secure alternative supplies and help lower the cost burden for domestic companies importing the material.

Earlier this month, the industry ministry said it will inject 674.4 billion won (US$457 million) to support up to 50 percent of the difference between pre-war prices and increased import prices of naphtha for the April-June period in a bid to stabilize supplies of the key material.

The country has also secured 2.1 million tons of naphtha by the end of this year from four Middle Eastern nations, including Oman and Saudi Arabia. The amount is equivalent to about a month's supply based on last year's demand.

Regarding the government's crude oil swap system, the ministry said oil refineries here have applied for swap deals amounting to around 31 million barrels for this month and next month.

As of Tuesday, the government has signed deals to exchange a combined 14 million barrels of crude with companies, and it is planning to sign additional deals to swap around 16.5 million barrels in May, the ministry noted.

Under the system introduced this month, the government is lending some of the crude stockpiles from its oil reserves, mostly Middle Eastern crude, to oil refineries to later restore the stock with alternative supplies secured by the companies.

"The ministry is considering extending the temporary system with the prolonging of the conflict (in the Middle East) and with companies' active participation," a ministry official said. The system was initially set for a two-month operation until the end of May.