SEOUL, July 17 (Reuters) - South Korea said it is amending a law to give freight rebates to crude oil importers who buy from regions other than the Middle East for specified uses, as the world’s fifth-largest crude buyer seeks to broaden supply sources.
Asia’s fourth-largest economy imported 306.5 million barrels of crude from the Middle East, or 82 percent of its total purchases, in the first five months of 2014. Like other major crude importing nations, South Korea also wants to diversify its sources of supply.
The country’s current law doesn’t give enough incentive for importers to switch their supply sources, with both Middle East and non-Middle East crude purchases eligible for a full refund of a 16 Korean won ($0.02) per litre import charge if used for strategic reserves, export of oil products or industrial naphtha production, said an energy ministry official.
Under the new law, the government will keep the 16 won per litre charge on all crude imports and still refund the charges for the specified usages, said the official, who has direct knowledge of the matter.
But non-Middle East crude importers will receive additional refunds for the freight cost difference with Middle East grades, he said, declining to be identified as he was not authorised to speak to media.
The revision will be effective from September 19, according to a document on the energy ministry’s web site (www.motie.go.kr).
The rebate will continue to be 90 percent of the freight charge difference with Middle East suppliers, the official added. ($1 = 1031.3000 Korean Won) (Reporting by Meeyoung Cho; Editing by Muralikumar Anantharaman)