# Dynamic Changes in the Export Competitiveness of the South Korean Oil Refining Industry
## 1 Introduction  
The global oil refining industry is facing various changes in the policy environment. The regulation of the International Maritime Organization, called IMO 2020, requires a reduction in the sulfur content of fuel oil from 3.5 to 0.5% or less for all ships operating international routes from 2020 [1]. Considering that the global demand for marine fuel accounts for 7% of the total oil demand, and 50% of the world demand for high sulfur oil is for ships, the change in demand for oil is expected to be large following the introduction of IMO 2020 [2].  
Policies for the dissemination of eco-friendly vehicles are also causing major changes in the oil refining industry. Canada has committed to 100% of new cars sold being zero emission vehicles by 2040. The European Union imposes fines on automakers when they exceed the average CO\({}_{2}\) emission target, and credits companies that make a high proportion of vehicles with emissions of 50 g of CO\({}_{2}\) per km or less.  
On the other hand, the oil refining industry is one of the key industries in South Korea. As of 2020, South Korea's oil consumption ranked eighth in the world, and South Korea was the fifth largest oil importer in the world after China, the United States, India, and Japan. Accordingly, the oil refining industry has an important position in the South Korean economy. The contribution of the oil refining industry to South Korea's total output in 2018 was 3.32%, higher than the contributions of the semiconductor (3.10%) and steel industries (2.28%). In addition, the export contribution of the oil refining industry in 2018 was 5.96%, lower than the contribution of the semiconductor industry (9.10%), but higher than those of the steel (4.39%) and automobile industries (3.33%).  
However, the South Korean oil refining market is facing a deterioration in business performance due to a decrease in domestic and export demand, a decrease in refining margins, and a drop in oil prices. Refining margin is the price of petroleum products minus crude oil price, refining cost, freight cost, etc. The higher the refining margin, the higher the profitability of an oil refinery. In general, the decrease in the demand for petroleum products, such as gasoline and naphtha leads to a decrease in the demand for crude oil, which is a raw material. Therefore, during the period of falling oil prices, South Korean oil refineries experienced difficulties in management due to the decline in refining margins. The losses made by the oil industry in 2020 exceeded 4 billion dollars, and the outlook for domestic demand and exports is also not bright amid the global enthusiasm for carbon neutrality.  
This study aims to analyze the export competitiveness of the South Korean oil refining industry by using import and export data from 2000 to 2019. To this end, the concentration of export items is comparatively analyzed using the Herfindahl-Hirschman Index (HHI) for the oil refining industry. Moreover, the degree of specialization of the South Korean economy in the oil refining industry and the comparative advantage of domestic oil products are comparatively analyzed through the trade specialization index (TSI), the revealed comparative advantage (RCA), and an analysis of their 2 \(\times\) 2 matrix.  
The remainder of this article is organized as follows. Section 2 reviews the export state of the oil refining industry. Section 3 explains materials and methods. Section 4 interprets the results. Section 5 presents a discussion of the results. The final section contains some concluding remarks.