The government said the scale of compensation for refiners' losses under the oil price cap will be significantly lower than the 3 trillion won level cited in the industry. It reiterated that compensation will be calculated on a cost basis, not by covering export opportunity profits.
Yang Gi-uk, Deputy Minister for Industrial Resource Security at the Ministry of Trade, Industry and Resources, said at a daily briefing on the Middle East situation on the 14th, "The loss of around 3 trillion won presented by the refiners is the maximum figure derived from a simple calculation based on the Singapore Mean of Platts Singapore (MOPS) price," adding, "If calculated on a cost basis, it will be significantly lower than that."
Deputy Minister Yang also challenged the very concept of "loss" claimed by the refiners. He said, "There may be various ways to look at losses from the price cap, but the losses claimed by the industry are precisely 'forgone opportunity profits,'" adding, "It refers to the portion where they would have earned more had they exported, but could not."
He added, "I understand that each of the four refiners (SK Innovation, GS Caltex, S-Oil, HD Hyundai Oilbank) posted more than 800 billion won in operating profit in the first quarter," and said, "One can assume there would have been more profit without the price cap, but under the principle of safeguarding national finances, we do not compensate all such opportunity profits."
The government plans to prepare a notice on the criteria for calculating loss compensation by the end of this month. The cost basis will include all increases in Dubai crude prices, the official selling price (OSP), and transportation and logistics expense increases, and the government is continuing consultations with refiners on the detailed calculation method.
It also presented a benchmark for international oil prices to end the price cap. Deputy Minister Yang said, "We can consider ending it when international oil prices fall to $100 per barrel or lower, preferably in the $90 range."