Korean Refiners Soften Stance on Oil Price Cap Compensation Amid Legal Risks
Korean refiners are shifting their stance on accepting government compensation for losses incurred due to the oil price cap. Initially, they argued that the losses exceeded the government's estimates and should be compensated based on market transaction prices.
However, after prosecutors indicted several refiners on charges of price collusion and the Korea Fair Trade Commission conducted investigations, some companies are now accepting the government's plan to provide compensation based on cost plus a reasonable margin.
The government has set aside 4.2 trillion won in reserve funds to cover losses incurred by the four domestic refiners: SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank. The Ministry of Trade, Industry and Resources announced that it will freeze the ninth oil price cap at the existing eighth level for one month.
A refining industry official stated that 'getting settlement from the government is important' and that accepting the government plan based on cost is advantageous to reduce risk. However, other refiners are still pushing for more compensation, arguing that the expected amount of 1 trillion won per company is insufficient to cover losses.