900,000 Barrels of Stockpiled Oil Shipped Overseas From Korea

Amid severely constrained crude oil supplies due to the Iran war, it has been revealed that 900,000 barrels of crude owned by foreign company A, stored at a domestic petroleum stockpile facility, were sold overseas rather than to Korea.

Company A delivered a total of 2 million barrels of crude to a domestic stockpile facility between the 5th and 8th. This was pursuant to a purchase agreement between Company A and a Korean refiner to bring crude into the country.

However, the Iran war broke out in late February before the crude arrived in Korea. As international oil prices surged in its aftermath, Company A reportedly pursued contracts to divert all 2 million barrels to other countries offering higher prices.

Upon learning of this, Korea National Oil Corporation protested to Company A and announced its intention to exercise its "right of first purchase," but managed to secure only 1.1 million barrels belatedly.

The export of 900,000 barrels overseas is a serious problem given concerns about prolonged high oil prices. Yet the blame game between the Ministry of Trade, Industry and Energy, the responsible ministry, and KNOC, the government agency managing strategic reserves, is even more troubling.

The ministry has launched an audit of KNOC, viewing the incident as the subordinate agency's fault. However, under the Petroleum Business Act, establishing and implementing petroleum stockpile plans and policies is the minister's responsibility. The ministry should first reflect on its failure to address such institutional gaps despite multiple energy crises since the international joint stockpiling program began in 1999.

KNOC must also examine whether it could have exercised its legally delegated authority and responsibility more proactively during a national emergency, and seek measures to prevent recurrence. The corporation holds supervisory authority over stockpile operations and purchases.

The right of first purchase, in particular, is guaranteed to Korea in exchange for the "international joint stockpiling" program. It serves as a safeguard allowing our government to purchase stored volumes at international prices during emergencies, in return for leasing spare capacity at domestic crude and petroleum product storage facilities to oil-producing nations.

However, when a counterparty fails to fully comply with the exercise of first purchase rights and exports some volumes, as in this case, it undermines the system's credibility.

To accurately determine why this occurred, it is crucial for the government to approach the matter objectively, based solely on facts and without prejudgment.