As prosecutors indicted refiners on charges of colluding on oil prices, the companies' demands for compensation for losses under the oil price cap have also come under scrutiny. While the government has set aside 4.2 trillion won to cover losses, prosecutors are said to have found indications that refiners actually profited even after the cap took effect. Prosecutors plan to deliver related materials to the Ministry of Trade, Industry and Resources.
The Seoul Central District Prosecutors' Office's Fair Trade Investigation Division (Director General Na Hee-seok) on the 6th indicted four refiners—SK Energy, GS Caltex, HD Hyundai Oilbank and S-Oil—and four people, including three HD Hyundai Oilbank employees and one GS Caltex employee, on charges including violating the Fair Trade Act.
According to prosecutors, HD Hyundai Oilbank was found to have colluded with SK Energy after the U.S.-Iran war broke out in March this year, agreeing that SK Energy would raise prices 30 to 40 won per liter higher than HD Hyundai Oilbank. GS Caltex and S-Oil were said to have followed the two companies' prices, amplifying the overall market price increase. Taking the ripple effects into account, prosecutors said the conduct produced a competition-restraining effect worth an estimated 26 trillion won.
The issue is that refiners are asking the government to compensate for losses arising from the oil price cap that took effect in mid-March this year. Under the Petroleum and Alternative Fuel Business Act (Petroleum Business Act), the government may provide fiscal support to compensate corporations for losses incurred due to the implementation of the oil price cap. The government has secured 4.2 trillion won through a supplementary budget to cover the losses.
Refiners say the oil price cap has caused at least 4 trillion won in losses. Because domestic petroleum product prices are linked to the "Singapore Mean of Platts Singapore (MOPS)," they want the government to make up the difference with domestic sales prices based on that linkage. During the investigation, refiners also argued that "because domestic sales prices are linked to MOPS, the structure does not allow collusion."
However, prosecutors' own analysis of whether MOPS prices are linked to domestic sales prices found numerous cases in which domestic prices were frozen or even rose despite a steep drop in MOPS. In particular, during search-and-seizure operations in March, prosecutors were said to have obtained internal documents suggesting refiners were making profits even after the cap took effect, as well as accounting records that separately tracked manufacturing costs by product—gasoline, diesel and kerosene.
Prosecutors plan to provide the Ministry of Trade, Industry and Resources with the materials secured during the investigation to prevent improper losses of public funds. Beyond establishing the substance of the refiners' collusion, the aim is to use the investigative materials to stop the improper disbursement of reserve funds amounting to several trillion won. The government is expected to decide whether to pay actual compensation and the amount after a review by the settlement committee.
A prosecution official said, "We will ensure that reserve funds, raised from taxpayers' money, are not improperly wasted."