Government to Block Quasi-Oil Manufacture and Sale

The Korean government is considering closing down distribution and production sites of quasi-oil products from as early as April 2004.

The government also decided to close all the doors to quasi-oil production and sales by extending the oil industry law to gasoline alternatives.

The Ministry of Commerce, Industry and Energy (MCIE) said on December 23 that after consulting with the Regulatory Reform Committee, it decided to revise the oil industry law to cover quasi-oil products.

The MCIE renamed the law as “oil and oil alternatives industry law” to ban production of gasoline alternatives such as quasi-oil products or oil additives.

The revised law allows the government to take actions with its own hands against quasi-oil products manufacturers and sellers.

The MCIE is planning to put the law into effect from April 2004 after it passes the National Assembly in January 2004.

Director of the Oil Industry Department of the MCIE Yum Myung-chun explained why the ministry decided to revise the law, “It takes more than two years to get a court order if we file a law suit against quasi-oil product producers or sellers. Using the loophole, many of them have manufactured or sold quasi-oil products under our nose.”

On the other hand, Cenox and other quasi-oil product manufacturers that are at the center of the controversy argue that the revised law was to stem all attempts to develop alternative energy resources in the future.

The revised law defines quasi-oil products as a mixture of hydrocarbon and other substances including oil products or petrochemicals.

Most inflammable substances such as coal gas can be a hydrocarbon mixture. By adding the hydrocarbon mixture with oil products, quasi-oil manufacturers could escape the meshes of the law.

At first, the MCIE planned to make a new article that allows it to punish buyers of quasi-oil products as well as producers and sellers. However, accepting the RRC’s advice, the MCIE stepped back from its first position.

Eun-Woo Lee libra@donga.com