Thrift gas stations criticized as being a distortion

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Thrift gas stations criticized as being a distortion

Gas station operators in Korea are urging the government to totally overhaul its policy on altteul or “thrift” gas stations and held a protest at the Korea National Oil Corporation (KNOC) headquarters in Anyang, Gyeonggi, yesterday.

Members of the Korea Oil Station Association (KOSA) and Korea Oil Association (KOA), which represent some 10,000 gas stations and 600 gas distributors, claimed that the thrift gas stations weaken the industry and that the government’s support translates into discrimination against other gas station operators.

The state-run KNOC started thrift gas stations in 2011 in a bid to provide gases at cheaper price by diversifying the supply and relying less heavily on local refiners. As of the end of March, there were 1,038 altteul gas stations, accounting for 8.2 percent of the total in Korea, according to KNOC data.

KNOC aims to have 1,300 altteul gas stations by 2015.

“The local oil distribution market is already saturated and profit margins have been cut in half, but the government’s unfair policy is pushing normal business operators into a more difficult situation,” a joint statement from KOSA and KOA said. “The KNOC should focus on its main job of exploring resources overseas and making stable energy supply and demand instead of interfering in private petroleum distribution.”

The associations said that despite tax breaks and financial support from the government, gas from the altteul stations is not that much cheaper. According to them, among 15 altteul stations in Seoul, only three were cheaper than regular gas stations.

“If you factor in loyalty card points and discount promotions tied to credit card purchases, normal gas stations are actually cheaper,” the statement said.

KNOC refutes that assertion and says altteul stations have limited gas price hikes set by normal gas stations that are broking an oligopoly on gas distribution by the four local refiners.

These industry associations also accused KNOC of giving favorable treatment to Samsung Total Petrochemicals, a joint venture of Samsung Group and France’s Total.

Since 2012, Samsung Total has supplied gasoline from refining petrochemical materials like naphtha, not from crude oil. It is scheduled to start supplying diesel from June.

“Existing refiners signed supply deals with KNOC through a bidding process, but Samsung Total clinched its deal through a private contract, and KNOC supported the company by lowering gas quality standards, which is unfair treatment,” the associations said.

Meanwhile, the Korea Petroleum Association, a group representing local refiners, yesterday postponed giving membership to Samsung Total, saying it will need more time to review the qualifications of the company.

If Samsung Total gets membership, it will be the fifth refiner after SK Energy, GS Caltex, S-Oil and Hyundai Oilbank.

BY joo kyung-don []

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