Prosecution Uncovers Collusion, Blocks Oil Refiners' 'Loss Compensation' Claims and 4 Trillion Won Public Fund Payout

Demanded 4 Trillion Won for "Losses,"
But Raids Reveal Evidence of "Fake Losses"
Production Cost Dispute With the Ministry Reaches Climax
Prosecution's Secret Ledger Brings Resolution
Refiners Triggered 26 Trillion Won Oil Price Surge

The prosecution's investigation into the oil refiners involved in a 26 trillion won price-fixing scheme, which took advantage of the US-Iran war, is now positioned to safeguard approximately 4 trillion won in public funds that could have otherwise been used to line the pockets of the refiners. During the collusion investigation, the prosecution has secured a smoking gun (decisive evidence) that completely undermines the oil companies’ main argument regarding 'loss compensation' standards, which had long been the biggest point of contention between the government and the oil 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 outcome of the investigation by the Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office (headed by Chief Prosecutor Na Heeseok) was the revelation of the true nature of loss compensation claims following the implementation of the 'maximum petroleum price system.' Currently, the oil refiners claim they have suffered losses amounting to several trillion won due to the aftermath of the US-Iran war and are demanding massive compensation from the government. The government, too, had already allocated approximately 4.2 trillion won in reserve funds in preparation for such loss compensation claims, highlighting the gravity of the situation.

The key issue determining the fate of this enormous amount of public funds was the calculation basis for 'production cost.' The oil industry has argued that, due to the nature of 'joint products'—where refining crude oil produces multiple products simultaneously—it is difficult to separately calculate the production cost of each petroleum product. Therefore, they have claimed that the cost should include not only the international price but also the additional premium attached to Korean refined oil in export markets, as well as tariffs and import surcharges. 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 refiners, resulting in an ongoing standoff.

However, the prosecution’s investigation has dismantled the oil companies’ logic. During the investigation, including search and seizure operations, the prosecution secured a large volume of internal documents indicating that the four major oil refiners were actually making economic gains even under the maximum petroleum price system. In particular, the prosecution is reported to have obtained a substantial number of internal accounting documents that can decisively refute the companies’ core claim that “it is difficult to calculate production cost and therefore the international price must be used as the basis.” The actual amount of loss compensation will be determined by the Ministry of Trade, Industry and Energy and its affiliated Settlement Committee in the future. The prosecution plans to proactively share these key documents—obtained in accordance with legal procedures—with the Ministry of Trade, Industry and Energy to ensure that reserve funds sourced from taxpayers are not unjustly wasted.

Legal experts and observers believe that this investigation goes beyond simply uncovering the facts of the price-fixing scheme or curbing corporate abuse of power. In a situation where the government was at risk of being manipulated by the oil companies' excessive demands, potentially losing trillions of won from the national treasury, the investigation and sharing of evidence by the prosecution are being praised as the most effective and powerful safeguards against unjust depletion of public funds.

Meanwhile, the prosecution has indicted four oil refiners—HD Hyundai Oilbank, SK Energy, GS Caltex, and S-Oil—on charges of violating the Fair Trade Act, for allegedly colluding to drive up oil prices by a total of 26 trillion won immediately after the outbreak of war. Responsible executives and employees, including those in charge of pricing at HD Hyundai Oilbank and SK Energy, who led the collusion, have also been brought to trial.

According to the prosecution, HD Hyundai Oilbank and SK Energy, in response to an unprecedented spike in oil prices after the war began, colluded to coordinate the timing and scale of petroleum product price hikes, resulting in direct price-fixing amounting to 14.2 trillion won. When including the parallel actions of GS Caltex and S-Oil, who raised prices based on this collusion, the total price surge amounted to 26 trillion won. In the process, messages exchanged among oil company employees such as “As expected, we’re a company that profits from war” and “Looks like we’ll make 2 trillion won this year” revealed the entrenched culture of collusive practices.

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