South Korea to Promote Bio Fuels to Reduce Oil Demand
Date: 21-Jan-05
Country: SOUTH KOREA
Energy-deficient South Korea, which has to import all of its crude needs, is trying to reduce its heavy reliance on imported oil in a bid to lower its exposure to fluctuations in global oil prices.
The country imports more than 70 percent of its crude oil from the oil-rich but volatile Middle East.
From 2006, South Koreans would be allowed to import, produce and sell alternative fuels, including liquefied coal, orimulsion and bio fuels, the ministry said in a statement.
"These alternative fuels were not covered by petroleum laws so suppliers were reluctant to market them aggressively due to fears about incurring penalties," said a ministry official by telephone.
"Consumers have also been reluctant to buy these fuels as they were unsure about their legal status," he added.
Bio fuels, which are derived from ethanol and gasoline, can be used to fuel cars, while orimulsion, a mixture of extra-heavy crude and water, can be used in power plants instead of fuel oil.
The official said that liquefied coal could also be used as a car fuel.
"We expect the move to help promote consumption of these alternative fuels so that hopefully demand for petroleum products can fall bit," he said.
Effective from 2006, alternative fuels would carry a 14 won per litre import surcharge, the ministry said. South Korea currently imposes a similar charge on imports of crude oil and petroleum products. Meanwhile, orimulsion would carry a 10 won per litre import surcharge starting from 2009, the ministry added.
Companies selling alternative fuels should maintain inventories equivalent to up to 60 days of local sales, it added.
