Korea says oil price cap compensation for refiners still undecided

South Korea's industry ministry said Thursday that the amount of state financial support to compensate oil refiners for losses under the oil price ceiling has not been determined, after a newspaper reported that estimates of the losses vary by as much as ninefold.

The Chosun Ilbo reported that internal energy-industry documents put refiners' losses between March 13, when the price cap took effect, and the end of September at a minimum of 670 billion won ($502 million) and a maximum of 5.71 trillion won ($4.28 billion). The ministry said the figure will be settled this year after deliberation by a committee that reviews the maximum compensation amount, and asked media to be cautious because no specific sum has been fixed.

Under the procedure, refiners apply for financial support, the maximum-compensation settlement committee reviews the amount based on the application materials, and the government makes the final decision on the committee's review. The ministry cited Article 23 of the Petroleum Business Act and the regulations on financial support for loss compensation under the designation of a maximum petroleum sales price. Support is to be paid according to the cost-based settlement principle set out in the notice, losses are compensated from state finances under Article 23, Paragraph 3 of the act, and settlement proceeds on a quarterly basis.

The ministry said the support is expected to be manageable within the current budget.