Retroactive settlement abolished

New weekly advance price notification and settlement system to take effect

Move aims to improve price predictability for gas stations and stabilize consumer prices

Diesel — a 'livelihood fuel' — to be discounted by 50 won per liter for one month

An SK Energy gas station. [SK Energy website]
An SK Energy gas station. [SK Energy website]

By Park Hye-won, The Herald Business

SK Energy announced Monday it will become the first company in South Korea's refining industry to introduce an advance notification system for fuel supply prices to gas stations. The move is intended to support the government's price stabilization drive and help keep consumer fuel costs in check during a period of elevated oil prices.

The company said it will abolish the existing retroactive settlement system — under which refiners supplied petroleum products first and then finalized prices after the fact to reflect market conditions — and replace it with a new advance notification framework. The change addresses the sharp price swings that can occur between the time of supply and the point of actual sale, driven by real-time fluctuations in international oil prices due to exchange rate movements, supply-and-demand shifts and geopolitical variables.

The overhaul comes in response to the confusion caused by pump prices surging in tandem with recent spikes in international crude prices.

Under the new system, SK Energy will determine and announce supply prices for each gas station on a weekly basis before delivery takes place, using standardized criteria and transaction terms. Settlement will then be carried out weekly based on the pre-announced prices.

The new framework is set to take effect after the government's current petroleum price cap regime ends. "This is a measure to improve the predictability of purchase prices for retail customers such as gas stations and to contribute to consumer price stability," an SK Energy official said.

Separately, SK Energy will also cut the retail price of diesel at its gas stations. Starting Tuesday, the company will lower the pump price at its directly operated stations by 50 won per liter for one month. Discount subsidies will also be provided to independently operated SK-branded stations to ensure the same price reduction applies there as well.

"We will ease the burden on consumers through diesel — a 'livelihood fuel' primarily used in vehicles closely tied to people's livelihoods, such as freight trucks, delivery vehicles and light trucks," the official said.

SK Energy President Kim Jong-hwa said the company will work to strengthen trust with customers and the market "as a responsible energy company," through efforts including improving its supply price determination structure, supporting the stability of people's daily lives and diversifying crude oil import sources.


klee@heraldcorp.com