South Korea's energy diplomacy at risk as ruling party boycotts Yoon impeachment

South Korea's energy-related diplomatic functions are currently stalled, as the effort to establish the nation's new leadership structure and foreign affairs system has encountered a setback after ruling party lawmakers boycotted a motion to impeach President Yoon Suk-yeol.

Although President Yoon has neither been arrested nor impeached over the martial law attempt, the nation is effectively experiencing a leadership vacuum, as both the government and the entire cabinet have lost public support and credibility.

Following the cancellation of numerous international summits and the refusal of top state officials from the US, Europe, and Oceania to visit Seoul, South Korea's diplomatic standing is vulnerable, according to participants from the refining and petrochemical industries on Dec. 9.

For instance, Swedish Prime Minister Ulf Kristersson canceled his trip to South Korea last week, and US Secretary of Defense Lloyd Austin also called off his initial plan to visit Seoul.

The leadership vacuum and stalled state diplomatic functions have placed energy security at risk for Asia's third biggest crude importing nation, according to feedstock managers at three major South Korean refiners and a naphtha trading team leader at a Petrochemical company based in Daesan.

The sources declined to be identified due to the highly sensitive nature of the recent domestic political conflict.

"If any geopolitical events lead to severe disruptions in global crude supply, the private sector would have to bear the entire burden of securing oil in the international market without any state diplomatic support," a feedstock and logistics manager at a major South Korean refiner told S&P Global Commodity Insights.

South Korea relies on imports for almost all of its crude requirements. It imported 865.339 million barrels in the first 10 months of 2024, up 4.2% from a year earlier, latest data from the state-run Korea National Oil Corp. showed.

Furthermore, South Korea's overseas upstream projects may also face operational challenges, as many administrative, operational and legal procedures require state-level management and approvals, according to crude traders and refinery feedstock managers in Seoul and Singapore.

In October 2022, KNOC brought 362,000 barrels of Abu Dhabi Murban crude produced at the UAE's Haliba field. The onshore field is 60% owned by Abu Dhabi National Oil Company, 30% by KNOC and 10% by South Korea's energy developer GS Energy.

Significant delays are anticipated in restoring the government leadership structure, primarily due to the ruling People Power Party's refusal to participate in the National Assembly voting process for the impeachment bill.

Without Yoon's formal impeachment, Prime Minister Han Duck-soo cannot legally assume the nation's leadership as acting president until a new election is held within 60 days. In the absence of an acting presidency, both the government and foreign diplomacy will struggle to function effectively, as most of Yoon's cabinet staff are currently under investigation by the police and state prosecutors.

Liberal opposition parties, including the Democratic Party and Rebuilding Korea Party, said they will hold a vote to pass the impeachment bill every week. Additionally, at least 1 million citizens are expected to gather in front of the National Assembly and various other public squares throughout the city of Seoul every Saturday to demand Yoon's impeachment and arrest.

The opposition parties collectively hold 192 seats out of the 300 in the National Assembly. To successfully pass the impeachment bill, a minimum of eight lawmakers from the ruling People Power Party must participate and vote in favor of the motion.

Middle East oil diplomacy

Without an effective government and foreign affairs system, the free trade agreement plan with Gulf Cooperation Council members could be halted, and the outlook for the deal appears bleak unless South Korea's leadership transition can proceed smoothly, according to industry sources and market analysts in Seoul.

Minister for Trade Dukgeun Ahn and GCC Secretary General Jassim Mohammed Al-Budaiwi signed a joint statement in December 2023, committing to a South Korea-GCC FTA. Seoul plans to complete an economic impact evaluation, seek the National Assembly's ratification agreement and execute other necessary administrative procedures for the FTA's entry into force.

"It is very unclear when the deal can fully be implemented now," said an official at the state-run Korea Trade-Investment Promotion Agency, declining to be identified.

Apart from South Korea's top crude supplier Saudi Arabia, the six GCC members include other major crude suppliers such as Kuwait, the UAE, Qatar, Oman and Bahrain. Among major Middle Eastern crude suppliers to South Korea, only Iraq is not a member of the GCC.