(EnergyAsia, March 27 2014, Thursday) — South Korea expects to generate US$25 billion per year in revenue from oil storage and trading activities when its three commercial terminals are fully operational from 2021.

As part of its plan to turn the country into a global trading and storage hub, the government will grant oil trading companies greater trading flexibility, exemption from corporate tax for five years, and support to develop financial services and oil derivatives. It will also encourage the region’s main energy media like Platts and Argus to offer their services to price oil for trading use.

The Ministry of Energy Trade and Industry said oil companies which complete the initial five-year programme will be given a 50% discount on the country’s 22% corporate tax rate for another five years.

The ministry plans on leasing 20 million barrels of state-owned storage capacity for private and foreign companies to store, distribute, blend and trade crude and oil products. This will boost South Korea’s total oil storage capacity available for commercial purposes to 56.6 million barrels to compete against Singapore’s 52 million barrels.

The government will also make it easier for the companies’ foreign employees and families to obtain residency rights and education for their children.
The energy ministry said the plan was approved at recent a meeting of the trade-investment promotion committee presided over by the country’s President Park Geun-Hye.

South Korea has set its sight on becoming the world’s fourth main oil storage and trading centre after the Amsterdam Rotterdam and Antwerp (ARA) area in Europe, Houston in the US and Singapore. It is investing heavily to develop the country’s southern port cities of Ulsan and Yeosu into oil hubs to serve the rising energy demand of northeast Asia.

State-owned Korean National Oil Corp and its partners are building the country’s second terminal in the southeastern port of Ulsan to store up to 9.9 million barrels of refined products. The consortium, which includes Dutch logistics specialist Vopak and South Korean refiner S-Oil, expects to start up the 622-billion won terminal in 2017.

South Korea’s first commercial terminal in Yeosu started up last April with the capacity to hold 3.5 million barrels of crude and 4.7 million barrels of oil products. Plans are underway for the construction of a third terminal in Ulsan by 2020 to store 18.5 million barrels of crude.

The government owns and operates nine terminals to hold up 146 million barrels of crude and oil products.