400,000-barrel minimum and long-term contract requirements temporarily waived

Policy to diversify crude oil import sources reinstated

The government will temporarily ease crude oil import levy refund requirements for refiners sourcing oil from outside the Middle East, with the relief running through year-end. The ceiling on reimbursable freight cost differences compared with Middle Eastern crude will also be raised to a maximum of 100%.

A gas station in Seoul. [Yonhap]
A gas station in Seoul. [Yonhap]

The Ministry of Planning and Budget said Wednesday it had voted, through a written review by the sixth session of the Levy Operation Deliberation Committee, to ease refund eligibility requirements and expand refund limits for diversified crude oil import levies for the September-through-December period this year.

The diversified crude oil import levy refund system returns a portion of the freight cost difference incurred when importing crude from regions outside the Middle East — such as the Americas, Europe and Africa — compared with Middle Eastern crude. The current refund rate stands at about 25 percent of the freight cost difference.

Under the new measures, the government will temporarily waive the minimum import volume requirement of 4 million barrels and the one-year long-term contract requirement. The refund ceiling will also be expanded to cover up to 100 percent of the freight cost difference, within the scope of crude oil import levies paid during the applicable period.

Earlier, the government had temporarily applied the same eased refund requirements and expanded limits from April through June in response to crude oil supply disruptions caused by the war in the Middle East. With uncertainty surrounding the conflict persisting, it decided to reinstate the expanded refund policy for the September-through-December period.

The petroleum import and sales levy is a statutory charge imposed on importers of crude oil, petroleum products and natural gas. Revenue collected flows into the special account for energy and resource projects and is used to stabilize oil supply and prices.

The government expects the measures to reduce the freight burden on domestic refiners importing diversified crude, thereby creating an incentive to broaden their sourcing beyond the Middle East. Going forward, the government plans to administer the levy system in a way that accounts for overall economic conditions and the business environment, with the aim of boosting economic vitality.


y2k@heraldcorp.com