COVID-19 Threatens South Korea's Crude Oil Demand

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Researched by Industrial Info Resources (Sugar Land, Texas)--The resurgence of COVID-19 in South Korea poses a risk to its crude oil demand in second-half 2021 as Seoul returns to the country's harshest pandemic restrictions on social distancing.

There are five refineries in South Korea: Ulsan, processing 840,000 barrels per day (BBL/d); Yeosu (790,000 BBL/d); Seosan Daesan (690,000 BBL/d); Onsan (669,000 BBL/d); and Incheon (300,000 BBL/d). The country is a net exporter of oil products, shipping out an estimated 1.4 million BBL/d in 2019, compared with almost 1.0 million BBL/d in 2019, according to the most recent data from the U.S. Energy Information Administration (EIA).

The country's fuel oil demand increased in the first part of the year as economic activity picked up, especially manufacturing and domestic travel: 377.61 million barrels of oil products were consumed from January to May, an average of 2.5 million BBL/d, up 1.6% from the same period a year earlier, according to the latest data from state-run Korea National Oil Corporation.

However, a surge in COVID-19 infections -- Wednesday saw a new daily high in cases -- could threaten that upward momentum. Seoul has been at the center of the outbreak and under the country's strictest social distancing restrictions since July 12, which include a ban on gatherings of more than four people and a mandate for non-manufacturing businesses to reduce on-site staff by 30%, while hotels must be at a maximum of two-thirds capacity. Such measures in the capital city, with a population of around 10 million people, could cut South Korea's oil products demand between 150,000 BBL/d and 400,000 BBL/d, according to market research analysts at Korea Petroleum Association and middle distillate marketers at major South Korean refiners surveyed by S&P Global Platts.

Industrial Info is tracking 107 refining projects in South Korea, worth more than $350 million, which are slated to begin construction from July 2021 through December 2022.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Project Database can click here for a full list of projects.

Click on the image at right for a graph showing South Korea's refining project kickoffs from July 2021 through the end of 2022, by project type.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.