The faint smell of gas hangs over a laboratory at South Korea’s biggest refinery, where chemical analysts are working overtime trying to find ways to wean the sprawling facility off crude oil from the Persian Gulf.
South Korea has long been a top global exporter of jet fuel, but the conflict in the Middle East is forcing its oil refineries to rethink how they do business.
The vast labyrinth in the southern port city of Ulsan relies on Middle Eastern oil, which is around 60 percent of South Korea’s crude imports. Its flow was cut off when the U.S.-Israeli war on Iran led to the blockage of the Strait of Hormuz, delivering what refinery officials called the most severe supply shock in its history.
South Korea tried to make up for the reduction in supply by increasing crude imports from the United States, Canada, Venezuela and Brazil. But the oil from these sources is different from what comes from the Persian Gulf, and has to be tested to make sure it would not damage the refinery and would also be profitable.
“We are continually testing unfamiliar types of crude,” said Donghyun Kim, a technician whose team has recently logged overtime hours at the Ulsan refinery. “Since the war, my team members have been struggling a bit.”
Switching a refinery from one type of crude oil to another is not as simple as pressing a button. Most refineries are built to handle mixes of crude from specific places. Oil from different parts of the world has varying densities and chemical characteristics, like sulfur levels. The wrong mix can damage the refinery, and repairs at a multibillion-dollar facility like Ulsan can be expensive.
The Ulsan Complex is the world’s second biggest refinery, according to the data analytics firm Industrial Info Resources. It is more than twice the size of New York’s Central Park, and can process 840,000 barrels of crude a day.
A problem at this refinery has the potential to affect energy supplies across continents. SK Energy, the petrochemical giant behind the Ulsan refinery, said that it would keep trying to diversify its crude oil sources because of concerns about instability in the Middle East.
Oil refineries take raw crude oil and turn it into usable, everyday products — like gasoline for cars, lubricating oils for manufacturing and a material called naphtha that goes into the production of plastics, paint and synthetic fabrics.
Before the Iran war, South Korea provided more than 80 percent of the jet fuel imported to the West Coast of the United States, as well as much of the supply in Australia, Japan and New Zealand. Since the war began, tanker traffic through the Strait of Hormuz has been choked off, and the price of jet fuel has nearly doubled.
While the International Air Transport Association, a global airline industry body, is not seeing widespread jet fuel shortages, the soaring fuel costs have forced airlines to raise ticket prices and cut flights. Despite the preliminary deal between the United States and Iran, fuel bills for airlines may not drop for months as the global supply chain for jet fuel, of which Ulsan is a key part, recovers from the shock of the war.
Before the conflict, the arrival of several supertankers from the Persian Gulf every week in South Korea was a routine matter. But earlier this month, on a wind-whipped day, the mooring of the Universal Winner was a moment of relief for the country.
The tanker, carrying 2 million barrels of crude from Kuwait, took more than 100 days to reach Ulsan, after the blockage of the Strait of Hormuz had stranded it in the Persian Gulf. It was able to transit the waterway after high-level talks between Iran and South Korea.
When the ship reached Ulsan on June 10, cranes on its deck hoisted pipes that locked into the cargo holds to begin the two-day process of unloading. The oil was pumped through miles of underwater and underground channels into a sprawling farm of storage tanks at the Ulsan Complex.
From the tanks, the crude can be fed to the refinery, which directs it into distillation columns around 300 feet high, beginning the process of extracting gasoline, jet fuel and asphalt, among other products. The air at the refinery is often filled with the odor of sulfur, an impurity that must be removed from crude oil to produce jet fuel and gasoline.
Refineries cannot simply choose to manufacture drastically more jet fuel from a given amount of crude. The jet fuel yield is roughly 10 percent of South Korea’s total production, dependent on the types of equipment and oil used, said Tae Hun Chang, an energy economist at Korea Energy Economics Institute.
The decline in crude supplies from the Middle East has led to a dip in South Korea’s jet fuel exports. The country exported 6.8 million barrels in April compared with 8.3 million in the same month last year, according to official data from the Korea Petroleum Association, an industry body.
This was because of limited crude supplies, according to SK Energy. The South Korean government imposed export caps on gasoline since the war began, but it did not on jet fuel, Mr. Chang said. The country’s jet fuel exports recovered somewhat in May but were still below prewar levels, according to the data firm Kpler.
At the refinery’s wharf earlier this month, crews were finishing loading the tanker STI Magic with about 287,000 barrels of jet fuel before it set off on a 16-day voyage to Sydney. Before the Iran war, seven to 10 empty tankers would arrive at the Ulsan Complex every week to pick up fuel. Now, that number has dropped by three, said Yeongho Kim, a storage operator.
It remains unclear when normal traffic will resume through the Strait of Hormuz, and the uncertainty is adding to the pressure on workers at the Ulsan Complex.
“We are operating in completely uncharted territory,” said Hwansoo Choi, an SK Energy spokesman.
The post How a Jet Fuel Refinery Is Scrambling After the Iran War Oil Shock appeared first on New York Times.
