S.Korea activates plan to secure energy sites

SEOUL - South Korea has activated an emergency plan to secure energy installations, from power plants and refineries to storage tanks, after the death of North Korean leader Kim Jong-il raised fears over what would happen next in the reclusive state.

Reliant entirely on imports for meeting energy requirements that feed some of the world's biggest companies such as Hyundai Motor Co and Samsung Electronics, South Korea activated the drill late on Monday.

It involves keeping staff on high alert and preparing to cope with any damage to facilities.

Security concerns over North Korea, which in 2010 shelled civilians on a South Korean island and is accused of sinking one of the south's warships earlier that year, were heightened after Seoul said the North had test fired a short range missile shortly before the announcement of Kim's death.

"We, since Kim Jong-il's death, have been holding a daily internal meeting reviewing risk management," a spokesman at state-run Korea Gas Corp, the world's largest corporate buyer of liquefied natural gas (LNG), told Reuters.

"We are intensifying security over our gas facilities and have an emergency team in place."

The world's fifth-largest crude importer and the second-largest LNG buyer after Japan currently holds 120 million barrels of oil in reserve, or 82 per cent of capacity, a spokesman at state-run Korea National Oil Corp (KNOC) told Reuters on Tuesday.

Crude accounts for 90 per cent and the remainder is products. The storage is equivalent to over 90 days of the country's consumption, the spokesman said.

The country has 3.42 million tonnes of LNG in storage, 92 per cent of capacity and enough to cover demand until the end of February, the ministry said in a statement on Monday.

KNOC has put its nine onshore and offshore oil reserve sites on high alert. Korea Electric Power Corp (KEPCO), a state-run utility, said in a statement that it has activated an emergency work system to ensure security of power supply facilities.

IMPORTS, STOCK RELEASE

South Korea's state-run and private oil and gas firms, including utilities and refiners, have not moved to boost imports, release stocks or raise refinery runs, government and industry officials said.

Apart from being on high alert, most refiners are opting to maintain business-as-usual operations. In talks for March crude imports, some are considering lowering imports compared with a year ago due to weak processing profits.

Of the total oil in reserves held via KNOC, South Korea directly owns 80 million barrels. Foreign companies have built the remaining inventory as KNOC leases part of the facility. The country has a right over those barrels in an emergency.

Any plan or request to release oil from its reserve would happen only if supplies are disrupted, the KNOC spokesman said.

The last time KNOC released oil from South Korea's strategic reserves was in July and August, when nearly 3.5 million barrels of crude and refined products were issued under a coordinated plan by the International Energy Agency (IEA).