South Korea to add 3 mil barrels to oil storage amid supply disruption fears

State-run Korea National Oil Corp. plans to add about 3 million barrels of crude oil and products to its strategic stockpile for national security to guard against disruptions from existing suppliers, mostly in the Middle East, CEO Dong Sub Kim said in an interview Nov. 5 in Abu Dhabi.

Kim, who runs South Korea's national oil exploration, production and storage company, said the national stockpile of 97 million barrels is currently stored underground and elsewhere in the country for the sake of national security. Stockpiles of 100 million barrels would be sufficient to meet South Korea's demand for about 100 days, he said.

"We have to be prepared" in case of disruptions in the Middle East, Kim said, noting that the national stockpile already includes crude from Saudi Aramco, ADNOC and most recently Kuwait Petroleum Corp.

KNOC said it will store 4 million barrels of Kuwaiti crude under a joint storage agreement with KPC to serve as strategic reserves for South Korea. Under the deal, 4 million barrels of Kuwait Export Crude, Kuwait's primary export grade, will be stored at KNOC's base in Ulsan on South Korea's southeast coast. The cargo would arrive at the Ulsan base by the end of December.

The possibility of Middle East disruptions has led Korean refiners to diversify their crude sources to include other countries, such as the US, while some domestic refineries have turned to Australia, the official said.

KNOC is also working on carbon capture projects and wants to obtain ammonia for power plants in its efforts to reduce its carbon emissions.

The carbon capture adds to work underway, with Norway's Equinor to develop floating wind farms offshore, the company's first venture into wind energy, Kim said at the company's exhibition booth at the Adipec conference in Abu Dhabi.

KNOC aims to have capacity to store 1.2 million mt/year of CO2 starting in 2030 and has begun talks with "major" oil producers to develop carbon capture storage space at the bottom of Korea's East Sea, he said.

In another effort to decarbonize, Kim said he planned to have discussions in Abu Dhabi about securing ammonia from ADNOC by 2028 for use in coal conversion at domestic power plants.

Oil exploration

Nevertheless, exploration for oil and gas is not being abandoned, Kim said, adding that KNOC has "high hopes" for natural gas and crude oil prospects in the country's east coast region.

On June 3, South Korean president Yoon Suk-yeol said the government had approved a plan to conduct exploratory drilling for a potentially massive oil and gas reserve off the country's southeastern industrial port city of Pohang.

The reserves could hold up to 14 billion barrels of oil and gas, enough to meet South Korea’s oil demand for 29 years and gas needs for four.

"It's for oil and gas, mainly gas," Kim said. "We have this area of potential, and we're going to see if any companies will join us; we're in that stage of the process."

Asked if he would prefer Donald Trump or Kamala Harris to be US president, with Americans voting on Nov. 5, he said, "It doesn't really matter. We have to plan ahead case by case under Plan A and Plan B."