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Leading independent bunker supply firm Chemoil Energy is considering building a bunker storage terminal at the South Korean port of Busan, Bloomberg reports.

Chemoil and South Korean conglomerate Hanjin Group are understood to have already submitted a project proposal to the Busan port authority for construction of the terminal, which is expected to have a total storage capacity of 230,000 - 250,000 cubic metres.

Details of the project have come to light following a seminar held on Friday August 6th in Tokyo, where executives from Chemoil, Glencore and Itochu Corp. are understood to have met to discuss Chemoil's strategic objectives.

Glencore became a majority shareholder in Chemoil after purchasing a 50.8 percent stake in the company towards the end of last year. Itochu owns a 37.5 percent share in Chemoil and the remaining 11.7 percent is in public hands.

The size of the South Korean bunker market is estimated to be in the region of 14 million metric tonnes per year with Busan taking around 8 million tonnes.

The market is currently dominated by its leading refiners SK Energy Co. Ltd., GS Caltex Corp., SK Incheon Oil Refinery Co. Ltd., S-Oil Corporation and Hyundai Oilbank Co. Ltd.

South Korea has five refineries with a total refining capacity of approximately 2.55 million barrels per day.

Chemoil's Chief Executive Officer Clyde Michael Bandy is reported to have said in an interview that South Korea is experiencing a fundamental change in the supply and demand balance with more new secondary units acting as net importers of fuel oil.

"That means oil brought in can be competitive in the country,” Bandy is quoted as saying.

In recent years Korean refiners have decided to produce less high sulphur fuel oil for export, focusing instead on processing fuel oil into lighter products since the premium of Middle Eastern light grades over heavier crudes started widening around five years ago.

According to data from the Korea Petroleum Association, high sulphur fuel oil exports declined by 7.4 percent during the first six months of 2010 compared with the previous year.

Chemoil's plan to build a storage terminal in South Korea would appear to be a logical step for a company which is understood to have ambitious growth plans and which, up until now, has invested heavily in its supply chain network.

Chemoil's storage network includes the Batangas terminal in the Philippines, Chemoil's flagship 448,000 cubic metre Helios Terminal on Jurong Island in Singapore and the GPS-Chemoil 600,000 cubic metre terminal in Fujairah.

The company is reported to be aiming to increase annual sales by as much as 15 percent following last year's 8.5 percent decline in sales to 15.1 million tonnes, from 16.5 million tonnes in 2008.