The Guru of the Refinery Biz

GS Caltex Chairman Hur says redrawing of national energy portfolio is vital; GS Caltex wins sixth Top Blue-chip Company Prize

Hur Dong-soo took the helm at the nation's second largest refinery, GS Caltex Corp., after working for the company longer than anyone and with an unrivaled expertise in the Korean refining industry. He is an authority in theory and practice with a doctorate in chemistry from the University of Wisconsin and 36 years of experience with the company. He still heads the Korea Business Council for Sustainable Development (KBCSD).
GS Caltex was awarded the sixth Top Blue-chip Company Prize from the Korean Academic Society of Business Administration (KASBA) in recognition of its contribution to the development of the Korean petrochemical industry for the past four decades at a seminar held at the Jeju Convention Center on Aug. 20.
The company emerged as a major Korean exporter, which saw its exports accounting for 51.3 percent of the 21.47 trillion won in sales it posted during 2007.
Commenting on GS Caltex being awarded the Top Blue-chip Company Prize from the KASBA, Hur said, "I understand that winning the award is construed as giving us encouragement to become a global leader beyond the position of a leader in the Korean industry.
"GS Caltex has now grown into a company with sales and net profit registering a six-fold and an eight-fold jump over those recorded in 1994, respectively, and we are striving to do our best in raising energy efficiency and contributing to improving the national competitive edge."Regarding a "low-carbon green growth scheme,"unveiled recently by the Lee Myung-bak government, he said the plan will serve as a boon to develop new technologies in related industries and create national wealth.
"Corporations will have to aggressively invest in R&D activities in the new and renewable energy sectors in the future. In particular, hydrogen is a futuristic, clean energy that emits no carbon dioxide, so GS Caltex has established a new energy research center and inaugurated the nation's first hydrogen station on the campus of Yonsei University last September. Hydrogen is now produced using naphtha and liquefied natural gas (LNG). We need to develop hydrogen-fueled technology using water instead of imported fuel, and it will take 30 to 40 years to do so. It is not an immediate issue, but we plan to continue to make investments with that in mind even though it will take time to become an ultimate alternative."As for ways of coping with crude oil price hikes, Hur said, "It is essential for Korea, which ranks ninth in the world in terms of energy consumption, to improve its energy efficiency and shift its industrial structure into an energy-preserving one. It is an important matter to rationalize the use of available energy.
"We need to expand the proportion of nuclear power for generating electricity and shift to diesel for transportation means while establishing policies designed to give incentives to corporations that reach targets of improving energy efficiency and penalties to the ones that fail to do so."He said many people still have a negative view toward diesel, believing that it causes more pollution and is poor in quality. However, the latest diesel-fueled technology proves to be the most energy efficient and causes less pollution, the opposite of traditional wisdom. Given the situation that fossil fuels will be available only for the next 10 to 20 years, diesel is one of the plausible alternatives as it is rated high in energy efficiency and emits less carbon dioxide. Hur said regulations based on efficiency and car exhaust rather than levying taxes would be a proper raw material portfolio: a higher use of diesel would boost Korea's leverage in negotiating the purchase of other raw materials from foreign countries and lead to higher technology standards in the domestic automobile industry.
Speaking about the fluctuations of crude oil prices, Hur said that West Texas Intermediate, continuously rising since 2004, hit a high of $147 per barrel and recently dropped to $110 before rising to $129 again. Due to the lingering uncertainties, crude oil prices are unlikely to decline. The problem now is that price fluctuations, which ranged from $1 to $2 in the past, would now swing as far as $30-$40 per barrel today, so companies are finding it difficult to cope with the ups and downs.
Commenting on the common belief that refineries are engrossed in profiteering by selling petroleum products even if they reap more exports than semiconductor firms, he said refineries posted direct exports worth $3.7 billion in May to place second in terms of the value of exports following shipbuilding firms, and first in July for the second consecutive month. The reason is that continuous investments into the sophistication of facilities has resulted in minimizing costs for importing crude oil and exporting more value-added petroleum products, including gasoline, kerosene and diesel. nw

GS Caltex Chairman Hur Dong-soo