South Korean refineries protest against customs duty on imports of crude oil for naphtha production

18-Dec-14

The South Korean Ministry of Strategy and Finance plans to impose customs duty on crude oil imports even if they are to produce naphtha, in the range of 1-3%. Refiners in the country are protesting against the government's plan to impose customs duty on imports of crude oil for naphtha production, starting 2015, as per koreatimes.co.kr. As per the Ministry, the customs duty is aimed at boosting revenue, but as per the refineries, the customs duty will further undermine their bottom lines and weaken price competitiveness of naphtha compared to overseas rivals. The government has imposed no tariffs on naphtha imports. Last year, the four major refineries ? SK Energy, GS Caltex, S-Oil and Hyundai Oilbank ? imported 138 barrels of crude oil to make naphtha. If the government imposes a 3% duty on the oil, it will cost them 330 billion won. It will be a huge burden on the refineries, which are expected to post record losses this year due to falling oil prices. Combined losses are expected to top 1 trillion won this year for the first time.