South Korea, taking cue from the United States, will share its Strategic Petroleum Reserve (SPR) storages with refiners to ease the supply glut amid plummeting demand from the coronavirus pandemic.

Korea decided to lease out the space to local energy companies from April to June, according to the Ministry of Trade, Industry and Energy on Monday.

SK Energy Co. is expected to store about 1.8 million barrels of crude in the state-owned storage tanks in Seosan, South Chungcheong Province, according to industry sources. GS Caltex Corp. is discussing renting the storage facilities in Yeosu after June while Hyundai Oilbank Co. is tapping storage for crude and petroleum products. S-Oil Corp. has not yet sought government support, according to sources.

“The biggest challenge for the refining industry right now is that they have no storage room,” a trade ministry official said. “We have not yet set a limit as we plan to open up the state fuel storages by accommodating industry needs as much as possible.”

The action came after a similar move from the U.S. energy department last week. The U.S. Strategic Petroleum Reserve has 77 million barrels of free capacity, which is a little less than what the country uses in four days.

As of 2019, Korea National Oil Corp. has nine facilities with total storage capacity of about 146 million barrels. It has about 34 percent spare capacity, enough to store an additional 50 million barrels.

Global crude prices have plunged to multi-year lows as the coronavirus outbreak took a sharp hit on oil demand. This was exacerbated by the price war between Saudi Arabia and Russia as the world’s top two oil producers flooded the market with increased production in a fight for market share.

By Oh Chan-jong, Won Ho-sup and Kim Hyo-jin

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