South Korea aims to gradually increase share of net-zero oil in US crude imports

Strong points

SK Innovation to buy 200,000 barrels/year of net zero crude from Occidental

South Korean refiners are closely monitoring US and European production of low-carbon crude

Crude imports from Norway climb to 17 million barrels in 2021

South Korea finds competitive U.S. crude very attractive in times of soaring benchmark oil prices, but Asia’s biggest customer of U.S. crude is also aiming to improve its green energy practices by gradually increasing oil’s share net zero gross in all raw material imports from North America. producer.

Not registered?

Receive daily email alerts, subscriber notes, and personalize your experience.

Register now

Leading South Korean refiners said American light sweet crude grades are generally placed on the list of monthly top picks for raw materials, particularly in times of high global energy prices, as North American barrels are cheaper than many Middle Eastern grades thanks to free trade between the United States and South Korea. commercial agreement. Persian Gulf producers, on the other hand, continue to raise their official selling prices.

According to the latest data from Korea National Oil Corp. The world’s fourth largest crude importer took 119 million barrels of crude oil from the United States in 2021.

In addition to commodity economics, crude oil trading executives and heads of major South Korean refiners told S&P Global Commodity Insights that companies have not forgotten their commitments to reduce their carbon footprint and that they closely monitor the growing availability of low-carbon crude in the United States. and Europa.

The country’s main refiner, SK Innovation, said on March 25 that it plans to buy 200,000 barrels/year of “net zero” crude oil from Occidental Petroleum Corp. for five years from 2025.

The company’s trading arm, SK Trading International, signed the deal with the Permian-based producer in a bid to accelerate the company’s energy transition initiative, an SK Innovation official said.

SK Innovation said it will refine Occidental’s crude oil into “net zero petroleum products” such as green jet fuel to help reduce carbon emissions and fight climate change.

“Buying American crude isn’t just about cutting costs or saving dollars and cents…American crude producers are rapidly improving their carbon capture technology and it makes sense for an end user having the right ESG mindset to fully support and appreciate these efforts,” said a raw materials and plant operations manager at SK Innovation’s Ulsan Refinery.

Net zero oil, CCUS technology

Net-zero oil refers to barrels produced by the direct capture and sequestration of atmospheric carbon dioxide via industrial-scale direct air capture facilities and geological sequestration, in contrast to claimed “carbon neutral crude” by upstream companies by simply offsetting emissions using carbon credits, the SK Chief Innovation Officer said.

SKTI explained that Occidental’s first net zero oil is created by blending crude oil with environmental attributes generated by the sequestration of atmospheric carbon dioxide captured through 1PointFive’s multi-solution platform for capture, use and carbon sequestration, or CCUS.

According to Occidental, 1PointFive is a CCUS platform with a single goal to help limit the global temperature increase to 1.5°C by 2050 through the commercialization of decarbonization solutions, including technologies Direct Air Capture or DAC from Carbon Engineering, Air To Fuels technologies and geological sequestration.

1PointFive’s first DAC installation, which is expected to be online in late 2024, will also include pure sequestration and is being deployed using Carbon Engineering’s industrial-scale DAC solution. According to SKTI, the facility will extract atmospheric CO2 and permanently store it deep in geological formations providing permanent and verifiable removal of carbon dioxide.

“We are excited to be part of the world’s first carbon reduction initiative that relies on addressing net zero oil based on a life cycle analysis. We are also excited to be teaming up with Occidental , one of the most respected energy companies in the world,” said Sokwon Suh, CEO of SKTI.

Carbon Neutral European Crude

According to market research analysts from Korea Petroleum Association.

South Korea’s second-largest refiner GS Caltex had purchased 2 million barrels of Johan Sverdrup certified carbon-neutral Norwegian crude at the point of production for delivery in September 2021.

GS Caltex has been buying Johan Sverdrup crude regularly since then, with South Korea importing more than 17 million barrels of crude from Norway in 2021, compared to 8.5 million barrels received in 2020, 1 million barrels in 2019 and 5 million from barrels in 2018, according to the latest data from the Korea National Oil Corp.

In June 2021, Sweden’s Lundin Energy, a partner in Norway’s giant Johan Sverdrup oilfield, said all future net production from Johan Sverdrup would be certified as carbon neutral produced by Intertek, under its CarbonZero standard.

More Stories
Nexus Fuels, virgin plastic waste company, continues its global expansion