As the U.S.-Iran conflict continues to disrupt oil supply, Venezuelan crude oil has made its way to South Korea for the first time in over 20 years. This development raises questions about whether it can serve as an alternative to alleviate the vulnerabilities posed by the Hormuz and Red Sea chokepoints.
According to industry sources, GS Caltex imported 110,000 barrels of Venezuelan oil last month, amounting to $12.015 million, with an average import price of approximately $109.23 per barrel.
This marks the first import of Venezuelan oil by South Korea in nearly two decades. From 2003 to 2006, South Korea imported Venezuelan heavy crude oil as a substitute for bunker fuel, but trade ceased after former Venezuelan President Hugo Chávez intensified resource nationalism. Subsequently, U.S. sanctions against the Maduro regime made importing Venezuelan oil an unfeasible option.
However, following the potential collapse of the Maduro regime earlier this year and the prolonged uncertainties surrounding the Middle East conflict, both the government and the refining industry began to seriously assess the economic viability and applicability of Venezuelan oil in domestic facilities. Moon Shin-hak, the first vice minister of the Ministry of Trade, Industry and Energy, stated in May that companies were in contact regarding Venezuelan oil imports and that results would likely emerge soon.
GS Caltex has been the most proactive in this regard. Chevron, which holds a 50% stake in GS Caltex, is currently the only major oil company engaged in oil drilling operations in Venezuela, producing about 200,000 barrels per day. Given the favorable conditions for short-term production increases, it is expected that Chevron will begin allocating export volumes to GS Caltex.
SK Energy and HD Hyundai Oilbank are also reportedly starting to evaluate the economic feasibility and refining potential of Venezuelan oil.
However, Venezuelan 'Merey 16' crude oil has a lower API gravity compared to Middle Eastern Dubai crude, making it a heavy sour crude with high viscosity and significant impurities such as sulfur and metals. The refining process is complex, requiring additional processing to convert it into high-value products like gasoline and diesel, making the assurance of economic viability crucial when considering transportation and refining costs.
In fact, GS Caltex's recent oil import is primarily aimed at assessing whether it can secure stable refining margins rather than generating immediate profits. A GS Caltex official confirmed, "We have indeed imported Venezuelan oil, but due to its lower quality, it was brought in for testing purposes."
If it is confirmed that securing refining margins is feasible, imports are expected to increase next year. An industry insider noted, "Given the precarious situation in the Hormuz and Red Sea, diversifying oil supply chains to countries like Canada, Australia, and Kazakhstan is not an option but a necessity," adding that the import of Venezuelan oil is part of this diversification effort.
* This article has been translated by AI.
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