Seoul, March 31 The government will operate a crude oil swap system with private companies, starting Tuesday, in a bid to help oil refineries secure alternative oil supplies and minimise supply disruptions, the industry ministry said.
Under the system, set to run over the next two months, the government will lend some of its oil reserves, mostly Middle Eastern crude, to oil refineries and later restore the stock with alternative supplies secured by the companies, reports Yonhap news agency.
The system will help the companies maintain stable stock despite a delay in supplies due to the effective closure of the Strait of Hormuz due to the Iran war, while ultimately postponing the release of the government's strategic oil reserves, the last line of defence in crude oil supply, as long as possible, according to the Ministry of Trade, Industry and Resources.
"Such a system is used for currency swaps," Yang Ghi-wuk, deputy minister for trade, industry and resource security, said in a regular briefing, stressing that the government has "been very inflexible in its operation of oil reserves."
"Since we are in a crisis, we decided to operate the system in a more flexible and responsive manner to overcome the situation," added Yang.
The official said four companies have currently applied for the program, which amounts to a combined 20 million barrels of crude oil exchange, with the government planning to first sign a 2 million barrel swap deal with an unidentified firm later in the day.
The private sector is working to secure alternative oil supplies from Africa, Central Asia, North and South Americas, Australia and other regions, he added, noting that South Korea is unlikely to face actual disruptions in domestic crude oil supply until end-June, said the report.
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