# Dynamic Changes in the Export Competitiveness of the South Korean Oil Refining Industry
## 2 Current Situation of the South Korean Oil Refining Industry and Literature Review
### Literature Review on Export Competitiveness of Oil Refining Industry  
Because economies of scale play an important role in the oil refining industry, which involves large-scale production facilities, previous studies consider crude oil refining capacity as a major factor in the export competitiveness of the oil refining industry [3; 4; 5]. Table 3 shows the number of refineries with more than 200,000 B/D (Barrels per day) that can enjoy economies of scale. All of the five refining facilities in Korea have a capacity of over 200,000 B/D, which is similar to Singapore and Taiwan in terms of refining capacity. Previous studies consider the facility utilization rate as another determinant of export competitiveness [3; 6]. As the capacity utilization rate increases, the proportion of fixed costs in production costs decreases, and thus, the refining margin increases. As of 2015, \begin{table}
\begin{tabular}{c c c c c} \hline \hline \multirow{2}{*}{**Year**} & \multicolumn{2}{c}{**Export Quantity**} & \multicolumn{2}{c}{**Export**} \\ \cline{2-5}  & **Thousand Barrels** & **Growth Rate** & **Million Dollars** & **Growth Rate** \\ \hline
2010 & 341 & & 29,814 & \\
2011 & 407 & 19.5\% & 48,951 & 64.2\% \\
2012 & 437 & 7.3\% & 53,251 & 8.8\% \\
2013 & 423 & \(-\)3.2\% & 49,691 & \(-\)6.7\% \\
2014 & 433 & 2.4\% & 47,221 & \(-\)5.0\% \\
2015 & 450 & 4.0\% & 28,288 & \(-\)40.1\% \\
2016 & 453 & 0.6\% & 22,606 & \(-\)20.1\% \\
2017 & 472 & 4.3\% & 30,058 & 33.0\% \\
2018 & 494 & 4.6\% & 39,978 & 33.0\% \\
2019 & 482 & \(-\)2.5\% & 35,279 & \(-\)11.8\% \\
2020 & 439 & \(-\)8.9\% & 21,499 & \(-\)39.1\% \\
2021 & 420 & \(-\)4.4\% & 33,235 & 54.6\% \\ \hline \hline \end{tabular} Source: Korea Petroleum Association Home Page. Available online: [[http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290](http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290)]([http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290](http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290)) (accessed on 3 February 2022).  
\end{table} 
Table 1: Export statistics of South Korean refining industry. \begin{table}
\begin{tabular}{c c c} \hline \hline \multirow{2}{*}{**Target Country**} & \multicolumn{2}{c}{**Export Volume**} & \multirow{2}{*}{**Ratio**} \\  & **(Thousand Barrels)** & & \\ \hline China & 90,345 & 21.5\% \\ Japan & 52,768 & 12.6\% \\ Singapore & 50,568 & 12.1\% \\ United States & 43,064 & 10.3\% \\ Australia & 42,495 & 10.1\% \\ Malaysia & 22,388 & 5.3\% \\ Philippines & 18,827 & 4.5\% \\ Others & 99,166 & 23.6\% \\ Total & 419,622 & 100.0\% \\ \hline \hline \end{tabular} Source: Korea Petroleum Association Home Page. Available online: [[http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290](http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290)]([http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290](http://www.petroleum.or.kr/ko/news/news3.php?mode=read&did=290)) (accessed on 3 February 2022).  
\end{table} 
Table 2: South Korea’s petroleum product exports by country (as of 2021). \begin{table}
\begin{tabular}{c c c c} \hline \hline \multirow{2}{*}{**Country**} & \multicolumn{2}{c}{**No. of Refining**} & \multicolumn{2}{c}{**No. of Refining**} \\  & **Facilities (A)** & **Facilities over**} & \multirow{2}{*}{**Ratio (B/A)**} \\  & **200,000 B/D (B)** & \\ \hline South Korea & 5 & 5 & 100\% \\ Japan & 23 & 7 & 30\% \\ China & 79 & 40 & 51\% \\ Singapore & 3 & 3 & 100\% \\ India & 26 & 15 & 58\% \\ Taiwan & 4 & 4 & 100\% \\ \hline \hline \end{tabular} Source: [3; 4; 5].  
\end{table} 
Table 3: The ratio of refining facilities over 200,000 B/D (Barrels per day). the utilization rate of refining facilities in South Korea was 86.1%, which is higher than the average utilization rate of the Asia-Pacific region (84.8%) [3]. In addition, geographical conditions are considered as factors affecting the export competitiveness of the oil refining industry [7].