Prosecutors Uncover Collusion and Block Oil Refiners’ Unjust 4 Trillion Won Loss Compensation Claim

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The prosecution's investigation into oil refiners that engaged in price collusion worth approximately 26 trillion won amid the U.S.-Iran war is focused on protecting some 4 trillion won in taxpayer funds that were at risk of being used to benefit these companies. During the collusion investigation, prosecutors have secured a smoking gun—definitive evidence—that completely refutes the oil refiners' claims regarding the loss compensation standard, which has been the main point of contention between the government and the industry. The prosecution plans to share this evidence with the Ministry of Trade, Industry and Energy.

According to legal sources on July 6, the most notable achievement of the Fair Trade Investigation Division at the Seoul Central District Prosecutors' Office (Chief Prosecutor Na Heeseok) is uncovering the reality behind the oil refiners’ claims for loss compensation stemming from the implementation of the "Maximum Petroleum Price System." Currently, oil refiners are demanding substantial compensation from the government, claiming they suffered trillions of won in losses due to the aftermath of the U.S.-Iran war. The government, also preparing for possible compensation, had already set aside approximately 4.2 trillion won in reserve funds, highlighting the severity of the situation.

The key issue determining the use of this massive amount of taxpayer money was the standard for calculating "production costs." The oil refining industry has argued that, since multiple products are simultaneously produced when refining crude oil—a so-called "joint product"—it is difficult to separately calculate the production cost for each petroleum product. Based on this, they have insisted that the cost should include not only the international price but also the additional premiums attached to Korean refined oil in the export market, along with tariffs and import levies, and that compensation should be paid accordingly. In contrast, the Ministry of Trade, Industry and Energy has insisted that losses should be calculated based on the actual "production costs" incurred by the oil refiners, resulting in a protracted standoff.

However, the prosecutors' investigation has dismantled the oil refiners’ logic. During the probe, including search and seizure operations, prosecutors uncovered a large volume of internal documents from the four major refiners that indicated the companies were actually making economic gains even under the Maximum Petroleum Price System. In particular, prosecutors reportedly secured substantial internal accounting records that can thoroughly refute the core argument of the oil refiners—that calculating production costs is difficult and therefore international prices must be used as the basis. The final amount of actual loss compensation will be determined by the Ministry of Trade, Industry and Energy and its subordinate settlement committee. To ensure that the reserve funds, which are composed of taxpayer money, are not wrongfully wasted, the prosecution plans to actively share these critical, lawfully obtained documents with the Ministry of Trade, Industry and Energy.

Legal experts and industry insiders believe that this prosecution investigation goes beyond simply uncovering the facts of collusion or cracking down on corporate abuse. In a situation where the government could have been swayed by the oil refiners’ excessive demands and lost trillions of won in public funds, the prosecution’s investigation and sharing of evidence is being credited as the most effective and powerful shield against unjustified waste of state resources.

Meanwhile, the prosecution indicted the four major oil refiners—HD Hyundai Oilbank, SK Energy, GS Caltex, and S-Oil—on charges of violating the Monopoly Regulation and Fair Trade Act, alleging that they colluded to induce a surge in oil prices after the outbreak of the war, resulting in a collusive effect worth a total of 26 trillion won. Price-setting executives and other employees of HD Hyundai Oilbank and SK Energy, who spearheaded the collusion, have also been brought to trial.

According to the prosecution, HD Hyundai Oilbank and SK Energy directly colluded to raise oil product prices in both timing and scale, amounting to 14.2 trillion won, as oil prices surged abnormally right after the outbreak of the war. Taking into account the parallel price increases by GS Caltex and S-Oil, who raised prices in reference to this collusion, the total induced oil price surge reached approximately 26 trillion won. During this process, chat logs among oil company employees revealed chronic collusion practices, with messages such as "As expected, we're a company that lives off war" and "Looks like we'll make 2 trillion won this year."

This content was produced with the assistance of AI translation services.