(EnergyAsia, April 12 2013, Friday) — Asia’s latest major oil storage and distribution hub started up in South Korea’s Yeosu port city early this month amid rising concerns over the unpredictable regime in the neighbouring North.

State-owned Korean National Oil Corp (KNOC), the largest shareholder of Oilhub Korea Yeosu Co Ltd (OKYC) with a 29% stake, said the 1.3-million cubic metre facility is more than 80% leased since starting up on April 1. Local and international traders along with crude oil producing countries are among the customers of the US$500-million terminal located in the southeastern corner of South Jeolla province.

The start-up of South Korea’s largest storage facility coincides with rising tensions between North Korea, led by the 30-year-old President Kim Jong-un whose regime is threatening to launch nuclear war against the US and its Asian allies. Ironically, a major selling point for the new oil hub is that it enhances energy security for oil producers and traders by offering them a safe place to store their cargoes.

Singapore-based China Aviation Oil (CAO), OKYC’s second largest shareholder with a 26% stake, said the project is strategically located near the GS Caltex refinery and was developed over two years.

Comprising 36 tanks of sizes ranging from 6,000 cubic metres to 80,000 cubic metres, the terminal is equipped to handle and blend crude and all refined petroleum products. It has four berths with a draft of 17.7 metres to handle vessels of capacities ranging from 10,000 to 200,000 dead-weight tonnes (DWT) with access to the adjacent

325,000 DWT very-large crude carrier (VLCC) jetty owned by KNOC.

As Asia’s largest jet fuel trader with plans to expand its portfolio of other products, CAO said the new terminal will enhance its trading range and capabilities as well as services to customers in Asia. CEO Meng Fanqiu revealed that CAO has signed an eight-year lease with OKYC to store jet fuel, kerosene and diesel.

He said: “As South Korea is CAO’s main source of jet fuel supply and located close to its key customers in China, securing oil storage at OKYC’s terminal has strengthened CAO’s ability to ensure jet fuel supply to China. The terminal is able to support trading activities to the west coast of the US, Southeast Asia and Europe, which broadens CAO’s optimisation and trading opportunities.

“Currently, CAO has storage leases in jet fuel storage facilities in China and South Korea. The addition of OKYC’s terminal will not only complement CAO’s jet fuel trading business but will also enhance CAO’s network of oil storage facilities in the Asia Pacific.”

The terminal’s other all Korean shareholders include SK Energy Co Ltd, GS Caltex Corp, Samsung C&T Corp, LG International Corp and Seoul Line Corp.