S Koreans plan civic oil company in bid to supply cheaper oil products
Saturday, 23 June 2012 | 00:00
A group of eminent South Koreans said Friday it has launched a public campaign to set up a civic oil company to compete against the country's four refiners, claiming the oligopoly is the main factor behind high domestic oil prices.
Organizers including a former Cabinet minister, former and current lawmakers, former corporate executives and civic leaders say they aim to raise Won 100 billion ($86 million) to set up a "people's oil company."
They envisage their company providing oil products at retail prices 20% lower than those offered by the country's four refiners - SK Innovation, GS Caltex, S-Oil and Hyundai Oilbank.
Their civic oil company would build "efficient and low cost" refinery facilities and import cheaper crude oil from Canada and Siberia as a way to supply oil products at lower prices, the organizers said.
The four current refiners operate costly facilities and import crude oil from the Middle East at high prices, which leads to high domestic prices, organizers said.
"Domestic oil prices would be reduced by as much as 20% if oil consumers become oil suppliers by joining the civic oil firm," said campaign leader Lee Ta-Bok, a former health and welfare minister.
"Oil consumers, such as car drivers, will have stakes in the oil firm, which means the public will own and run the company with an expert with professional career as its top executive," he said. "A number of people have joined the campaign and raised more than Won 5 billion in the past two weeks."
Lee said he plans to set up local chapters of the campaign committee across South Korea by the end of July, and establish a time frame for the establishment of the company after that.
South Korea's largest refiner SK Innovation controlled 34.8% of the domestic market in 2011, GS Caltex 27.2%, Hyundai Oilbank 20.4% and S-Oil 15.2%. They dominate the local market through supply contracts with the country's 12,900 retail pump stations.
Samsung Total Petrochemicals was recently allowed to enter the oil market as a fifth provider, but Lee said it would also be focused on maximizing profits rather than benefiting consumers.
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