In the first half of this year, the petroleum product export volume in the oil industry reached the highest level ever in the first half of the year, according to the Korea Petroleum Association. The petroleum product export volume for the first half of this year for the four domestic oil refining companies SK Energy, GS Caltex, S-Oil, and Hyundai Oilbank was reported to be 245.3 million barrels, surpassing the highest level reached in the first half of 2018 (237 million barrels) for the first time in six years.
The export volume of petroleum products increased by 7.3% compared to the same period last year, marking a growth trend for the third consecutive year since 2021 following the COVID-19 pandemic. The export value also increased by 9% to $23.76 billion compared to the same period last year, ranking third among the nation’s major export items after semiconductors and automobiles. This contributed significantly to the government’s goal of achieving an export target of $700 billion, recovering 59% of the $40.4 billion spent on crude oil imports by domestic oil companies.
The increase in exports can be attributed to the increase in global petroleum demand for gasoline and aviation fuel, which domestic oil companies responded to by increasing production. The operating rate of the domestic oil industry in the first half of this year reached 80.0%, steadily increasing each year since the 72.6% recorded in the first half of 2021.
Diesel accounted for 40% of the total export volume of petroleum products, followed by gasoline at 23%, aviation fuel at 18%, and naphtha at 8%. In terms of export volume by country, the rankings were Australia (18.6%), Singapore (13.0%), Japan (11.5%), China (9.0%), and the United States (8.7%). Australia has solidified its position as the largest trading partner for the third consecutive year due to the increased export of high value-added products such as gasoline and diesel.
Japan stands out as a country with a significant increase in export volume and value. Due to the closure of oil refineries ten years ago as part of decarbonization and energy conservation efforts, Japan is experiencing a shortage of gasoline and aviation fuel due to a decrease in refining capacity and fuel production. To meet the surge in overseas tourists, domestic oil companies swiftly expanded exports, resulting in a 51% increase in gasoline exports and a 70% increase in aviation fuel exports.
Despite these positive developments, the future outlook for petroleum product exports is uncertain. Refining margins are worsening due to the increase in petroleum product exports from countries like China and India in the second quarter. According to the International Energy Agency (IEA), Singapore’s refining margin per barrel fell from $10 in the first quarter to $4.8 in the second quarter.
Major export items like aviation fuel are expected to transition to sustainable aviation fuel (SAF) gradually in regions such as the European Union and the United States. The domestic oil industry needs strategic adaptations to cope with market changes.
A representative of the Korea Petroleum Association stated, “Based on the world-class refining competitiveness of the Korean oil industry, despite worsening refining margins, we are fiercely competing in the export market with competing countries and will continue to contribute to national exports by diversifying export destinations in the second half of the year.”