Samsung a small fry in gas industry

Petrochemical manufacturer Samsung Total will jump into the Korean refining industry after the government decided to let the conglomerate supply gasoline for altteul, or thrifty, gas stations yesterday.

After the joint venture between Samsung General Chemicals and Total Group, a French energy and chemical firm, agreed to participate in domestic distribution of refined oil, there was much buzz about the new phenomenon of “Samsung Gas Station.”

However, Samsung’s not in the position to supply highly refined oil like the existing four refiners: SK Innovation, GS Caltex, Hyundai Oilbank and S-Oil.

Samsung Total exports 100,000 tons of petrochemical products a year to Japan and other countries. It runs an aromatics plant in Daesan, South Chungcheong.

The company imports naphtha to crack into various petrochemical products, including paraxylene and benzene.

It is also able to produce midlevel or unfinished gasoline, similar to the kerosene made by the other refiners.

It currently exports all of the 37,000 barrels of midlevel gasoline it produces every month to other countries.

It plans to increase the monthly production capacity by 88,000 barrels by May.

Since Samsung Total can produce only midlevel gasoline, the Korea National Oil Corporation will refine the oil from Samsung so it can be used as vehicle fuel, said an official at Samsung Total.

“Specifics like the amount, price and other terms are under negotiation,” said the official.

She dismissed the idea that the company would run gas stations under the Samsung brand.

“SK refines 1.15 million barrels of oil every day, not every month, and Samsung doesn’t come even near,” an official at SK Innovation, the nation’s largest refiner, said.

There are around 1,400 gas stations, and Samsung aims to provide gas for about 60, the official explained.

As for the government’s intention to push gasoline prices down by 30 to 40 won by letting Samsung into the business as a competitor, an official at GS Caltex, the second largest refiner, was doubtful.

“Consumers don’t even notice unless the price goes down by more than 100 won,” the official said.

By Song Su-hyun [ssh@joongang.co.kr]