ULSAN, KOREA - “The port of Ulsan lies at a strategic foothold of marine transportation for Asia and the Pacific Ocean. Ulsan Port Authority will work diligently to turn the port into a hub of the Northeast Asian oil distribution by expanding and harnessing grand-scale petrochemistry infrastructure,” said Park Jong-rok, president of the Ulsan Port Authority (UPA).
History of Port of Ulsan
The port of Ulsan, which marks its 50th anniversary this year, was developed throughout the course of a five-year economic development plan in 1963. Over the past 50 years, the figures representing the amount of commerce associated with Ulsan port have increased staggeringly. The quantity of good transported at the time of opening amounted to a total of 924,000 tons and the number of ships coming into port was a meager 1,900. Today, the amount has surpassed 100 million tons, up by a factor of 177, and the number of ships increased tenfold to 2,576.
In the 1970s, with automotive and shipbuilding industries booming and petrochemistry businesses expanding, the port of Ulsan witnessed rapid growth, subsequently propping up heavy chemical industries. Throughout the 1980s and 1990s, traffic demand of export cargo surged at the port, subsequently leading to the expansion of the port. Today, the port of Ulsan is the third largest port in Korea after those located in Busan and Gwangyang, and it remains at the top in the area of liquid treatment. In terms of liquid cargo treatment, the port of Ulsan is ranked fourth worldwide after Houston, Rotterdam, and Singapore, dealing with 200 million tons annually.
Northeast Asian Oil Hub
UPA is now pushing ahead with its developments of large-scale petrochemistry infrastructure with the aim of building “the Northeast Asian oil hub”. “The Northeast Asia oil hub is a key business, having been selected as one of 100 national projects in 2008 with the goal of preoccupying the region’s oil distribution market including petroleum exchange, and also of strengthening our ability to react to an oil crisis,” Park said.
The project is designed to build a storage facility of 28.4 million barrels in the rear site of 899,000m2, as well as eight oil terminals, including one dolphin of 120,000 tons by 2020. In accordance with the “3RD National Port Plan” established in 2011, the port of Ulsan will secure 33 berths by investing a total of 6.57 trillion won before 2020. Among them, the project costs for the Northeast Asian oil hub amounts to some 1.7 trillion won.
Park said that, “Once the project is completed, the port of Ulsan will not only provide simple services including producing, storing, and discharging liquid cargo, but will also serve a ‘commercial function’ for the transaction of comprehensive oil products. This potential “global market hub of liquid hub” will provide spot transactions of oil products and liquid cargo, as well as be available for future trading. The Northeast Asia’s oil trade is expected to boom with its imbalance between oil supply and demand being substantial and continuing to rise.”
Growth Engine for the National Economy
The successful completion of the Northeast Asian oil hub will help to expand Korea’s global market share. The hub will be harnessed as Northeast Asia’s supply base and port of transshipment for the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline. It will serve as a determining factor for pricing in the Asian regions including Japan and China, and may have an influence on the U.S, and Canada. On top of this, stimulating competition among suppliers at home and abroad, ultimately, will lead to the stabilization of international oil prices and improvements in cost transparency,” the president said.
He continued that, “Traditional businesses centering around oil refineries and petroleum product sales will turn into a new oil distribution industry, and the annual gain from the initial transaction is expected to amount to USD 22.8 million or so. The successful oil hub project will also contribute to stimulating Korea’s economy, triggering 4.5 trillion won in production, 61 million won in wages, and some 22,000 new jobs created.”
Oil Hub as Global Market Function
The overriding requisite for the oil hub depends upon whether the region has sufficient demand. In terms of oil demand, the Northeast Asian region has seen the fastest rate of increases, and is expected to continue this trend, driven largely by the import growth of China. Unlike other continents, the imbalance of the three Northeast countries – Korea, Japan, and China – is the biggest worldwide and their oil trade is expected to continually increase in the future.
“From the supply side, sources of crude oil flowing in the region will be diversified into other areas such as Russian ESPO, North American Oil Sand, and South American Orimulsion. Currently, the expansion of the Panama Canal and altering the course of its oil pipeline are underway. Once it is completed, VLCC (Very Large Crude Carrier) will become passable and as such the direction is estimated to shift from the Atlantic Ocean to the Pacific Ocean. Against this backdrop, there is a high possibility of the vitalization of oil distribution centering on the Northeast Asian region,” he said.
Past and Future of the Port of Ulsan
The port of Ulsan has reaped the fruit of rapid industrialization since the 1960s, but is also a product of a long history against a background based on its geopolitical condition. Historically, the port opened in the name of Yeompo during the Joseon Dynasty in 1426 along with two other ports in Pusan and Jinhae. At present, the port has grown to upraise the profile of the industrial city, to date having handled cargos of 190 million tons annually, and among them liquid cargos of 150 million tons.
“In the future, the oil surge in the Northeast Asian regions including China will continually expand its liquid cargo markets, and this global shift in distribution will be a favorable opportunity to the port of Ulsan. UPA will work assiduously to turn the port of Ulsan into the hub of the global liquid through successful completion of the Northeast oil hub,” Park said.