South Korea enforces naphtha export ban amid Middle East supply disruptions
The industry ministry announced that South Korea has begun enforcing an export ban on naphtha as it tries to ensure domestic supplies are not disrupted by the conflict in the Middle East.
This move will require refiners divert their exports to the local market, and the government can order the production and allocations of naphtha. Naphtha is a key feedstock for petrochemicals used in chip, autos, and plastics.
South Korea imports about 45% its naphtha, 77% of which comes from the Middle East. This makes the supply particularly vulnerable to regional conflicts, according to the ministry.
South Korea exports 11% of the domestically produced naphtha. The data?from both the Ministry and Korea National Oil Corporation show that this volume will be redirected towards domestic users in order to'stabilise supply.
According to the ministry, the ban will last for five months and priority will be given to healthcare, core industries, and essential consumer products.
The South Korean government announced last week that it had discussed with local companies potential imports from Russia of crude oil and naphtha after the oil trade between South Korea and Moscow was halted in?2022.
LG Chem, of South Korea, announced earlier this week that it would temporarily close its naphtha-cracking plant in the country due to difficulties securing naphtha as a feedstock. On Thursday, the CEO of the company thanked the government for "supporting" the purchase and payment of Russian naphtha.
According to the industry ministry, the government is also evaluating whether or not to extend export restrictions to petrochemicals.
Park Dong-il said, "Naphtha has been banned by the government - and we're looking at petrochemicals as well," at a round-table discussion with representatives of companies on?Friday.
Park responded to calls for the localization of petrochemicals like ethylene, synthetic resin and other products produced domestically. He said that the government will "review this matter quickly."
(source: Reuters)
