South Korea to curb naphtha exports as Middle East risks trigger emergency measures

SEOUL, March 18 (Reuters) - South Korea will limit naphtha exports and temporarily designate the feedstock as a supply-chain economic security item, the Finance Minister said, as authorities try to shield companies and consumers from the impact of the Middle East conflict.

The government will boost financial support for affected petrochemical companies by 1.5 trillion won ($1.01 billion), including for the cost of alternative imports and preferential interest rates for firms handling high-risk economic security items, Finance Minister Koo Yun-cheol said on Wednesday.

In a bid to explore ways to curb energy demand, the government should also draw up contingency plans to restrict vehicle use on designated days, such as five-day or ten-day rotation schemes, if the Middle East crisis drags on, President Lee Jae Myung said on Tuesday, calling for energy-saving efforts to "spread across society."
The latest steps add to a string of emergency measures taken this month, including South Korea's first fuel price cap in nearly 30 years, tighter monitoring of energy markets and efforts to secure alternative crude supplies, after the war-driven disruption of shipping routes through the Strait of Hormuz pushed global oil prices sharply higher.

The country on Monday lifted caps on coal-fired power generation and moved to raise nuclear reactor utilisation to around 80%, aimed at reducing reliance on oil and liquefied natural gas (LNG).

South Korea imports almost all of its energy, with about 70% of its crude oil shipments and 20% of LNG typically sourced from the Middle East, according to Korea International Trade Association data.

It is also one of the world's largest importers of naphtha, an oil product that is broken down into chemicals used in plastics for automobiles, electronics, clothing and construction.

($1 = 1,485.9000 won)