Korea freezes fuel price cap for 11th time, reviews Q2 refinery claims

South Korea's industry ministry said it will reimburse refiners for losses incurred under the government's maximum fuel-price cap on a cost basis, not on international petroleum product prices, and that a review committee is weighing second-quarter support applications filed by the refiners.

The Ministry of Trade, Industry and Energy said Saturday that the 11th round of the cap was frozen at the previous round's levels: gasoline at 1,784 won per liter, diesel at 1,773 won and kerosene at 1,380 won.

The ministry said the government judges that financial support to cover losses under the maximum-price system is feasible within the current budget.

A maximum-amount settlement committee of petroleum market, accounting and legal experts is examining the second-quarter applications under cost-based settlement principles, with funds to be paid after that review. The principle is set out in a public notice governing support for losses tied to the designated maximum petroleum sale price, and the committee has been running since July.

The distinction matters because the refining industry's accumulated losses of 7 trillion to 8 trillion won are an estimate of opportunity cost calculated on expected selling prices, the ministry said, while the government's compensation settlement is assessed on cost. Gasoline consumption has fallen 2.1 percent since the cap took effect and diesel consumption has dropped 8.4 percent, according to the ministry.