The Ministry of Trade, Industry and Energy signed a joint venture agreement (JVA) for the Northeast Asia Oil Hub Ulsan North Port Project at the head office of Korea National Oil Corporation (KNOC) in Ulsan on Nov. 13.
The agreement includes detailed discussions among participating companies to create and operate large commercial petroleum product and natural gas tank terminals in the North Port of Ulsan.
The main contents are the establishment of a joint venture amount and equity ratio for each investment company for 616 billion won in total project cost, and the establishment of an agreement on facility use and site lease.
KNOC, SK Gas and Singapore's MOLCT will participate as shareholders of the Korea Energy Terminal (KET) with a 49.5 percent, 45.5 percent and 5.0 percent stake, respectively. Meanwhile, 30% of total project cost will be raised by participating companies and 70% by project financing (PF).
The project is aimed at nurturing Ulsan and Yeosu as Northeast Asia's oil trading hub that are converged with oil logistics, trading and finance by utilizing Korea's superior infrastructure such as oil refining and chemical clusters and oil refining capabilities.
If large-scale commercial oil and gas facilities such as 8.18 million barrels in Yeosu, 2.73 million barrels in the North Port of Ulsan, and 16 million barrels in the South Port of Ulsan (Plan) are built, it is expected that they will increase their ability to respond to the global oil supply crisis caused by unstable situation and contribute to strengthening energy security.
Under the signing of the pact, the KET will build a 2.73 million-barrel tank terminal in the Noth Port of Ulsan from 2020 to March 2024, and push for commercial operations from April 2024.
According to a preliminary feasibility study report by the Korea Development Institute (KDI), the total production inducement effect of the first phase of the project is 1.452 trillion won, and of that, the production inducement effect is 838.2 billion won, which accounts for 59.65 percent in Ulsan.
The total value-added inducement effect is 550.8 billion won with 355.7 billion won worth of the effect in Ulsan. The total employment inducement effect is 9,685 workers with 7,277 workers in Ulsan.