The nation’s ambitious vision to build a Northeast Asian oil hub here hit another milestone on Monday as three local and international partners launched a joint venture firm to build and operate the nation’s second oil storage terminal in the North Port of Ulsan where Korea’s leading oil refinery complexes are located.

Korea National Oil Corp., Netherland-based Royal Vopak and S-Oil, the nation’s third-largest refinery, have agreed to set up a joint venture called the “Korea Oil Terminal” to push for the Ulsan project.

KNOC will take a 51 percent stake in the new entity, followed by Vopak and S-Oil with 38 percent and 11 percent stakes, respectively, the Energy Ministry said in a press release.

“We have been looking for a site for an oil hub in Northeast Asia, driven by our forward view and scenario planning around (oil) product flows,” Royal Vopak chairman and CEO Eelco Hoekstra said in an email interview with The Korea Herald. 

“The port of Ulsan is excellent for the setting up of a logistics infrastructure to support oil product flows resulting from rising energy demand in the Northeast Asia region.”

The CEO also said Ulsan was a great locale to build a Northeast Asian oil hub. “The city is a major refinery center (in the region), which adds to the suitability of this location as an energy hub,” he said.

The Energy Minister’s promise to create a proper local regulatory framework also gave a boost to launching Korea Oil Terminal.

“Easing of oil trading regulations will be one of the most important factors for the success of the Northeast Asian oil hub,” Hoekstra said.

Korea launched the $2 billion Northeast Asian oil hub project back in 2008 when the country began building its first commercial oil terminal in Yeosu, another refinery hub city in Korea. The Yeosu oil terminal with a maximum storage capacity of 8.2 million barrels was completed in June 2013.

In the second stage of the oil hub project, the Korea Oil Terminal will spend 622.2 billion won ($584 million) to build an oil storage terminal with a capacity of 9.9 million barrels of refined products in Ulsan by 2017.

The ministry expected the completion of the latest oil storage terminal in Ulsan to turn Korea into the second regional hub of oil storage and trading, following Singapore.

“This is an important project for both Korea and Vopak, and we are pleased to be part of it,” said the Royal Vopak chief. “We believe that this hub location is well-positioned to facilitate product flows within the refinery centers in Korea, Japan, Taiwan and China.”

Vopak already runs its own storage terminal with 274,600 cubic meter capacity for chemical and liquefied gas in Ulsan under the corporate name of Vopak Terminals Korea.

By Seo Jee-yeon (jyseo@heraldcorp.com)