As uncertainty surrounding oil supply due to the ongoing conflict in the Middle East continues, the government will temporarily reduce transportation costs for refiners importing crude oil from regions outside the Middle East. The support will allow refiners to receive refunds of up to 100% of the additional shipping costs incurred when importing crude oil from the Americas, Europe, and Africa compared to Middle Eastern oil.
On September 23, the government announced that it would ease the refund requirements and expand the refund limits for the diversified crude oil import levy during the period from September to December. This decision was made during the sixth meeting of the Levy Management Committee, chaired by Jo Yong-beom, Vice Minister of the Ministry of Economy and Finance.
The diversified crude oil import levy refund system is designed to reimburse a portion of the additional shipping costs incurred when importing crude oil from regions outside the Middle East, such as the Americas, Europe, and Africa. This initiative aims to lower the transportation cost burden for non-Middle Eastern crude oil, thereby encouraging domestic refiners to diversify their sources of crude oil.
Currently, about 25% of the shipping cost difference compared to Middle Eastern oil is refunded. To qualify for the refund, refiners must import a minimum of 4 million barrels and enter into long-term contracts lasting at least one year.
In response to disruptions in oil supply caused by the Middle East conflict, the government temporarily relaxed these requirements and expanded the refund limits from April to June. With ongoing uncertainties in the region, similar support measures will be implemented again from September to December.
Starting in September, the minimum import requirement of 4 million barrels and the one-year long-term contract condition will no longer apply. This means that refiners can receive refunds even if they secure additional non-Middle Eastern crude oil in a short period.
The refund scale will also see a significant increase, with the limit on the shipping cost difference refund expanding from the current level of about 25% to a maximum of 100%. However, refunds will only be available within the scope of the crude oil import levy paid by the refiners during this period.
The government believes that this measure will reduce the additional transportation cost burden on domestic refiners importing non-Middle Eastern crude oil, thereby promoting diversification in crude oil sourcing. The aim is to enhance the capacity to secure oil from other regions in the event of supply disruptions in specific areas.
The oil import and sales levy is a statutory charge imposed on importers of crude oil, petroleum products, and natural gas. Currently, a levy of 16 won per liter is applied to crude oil and petroleum products. For natural gas used for power generation, the levy is 3,800 won per ton, while non-power generation natural gas is charged 24,242 won per ton. At the sales stage, premium gasoline incurs a levy of 36 won per liter, and butane is charged 62,283 won per ton.
The collected levies are allocated to the Special Account for Energy and Resource Projects, which is used for stabilizing oil supply and prices.
The government plans to flexibly manage the levy system in consideration of economic conditions and the operational environment for businesses.
* This article has been translated by AI.
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