Export Surge
The exports of automotive lubricants by Korean companies to Russia have surged since Russia’s invasion of Ukraine, raising suspicions that the goods may have been diverted for military use. The Korean companies have strongly denied these suspicions.
On July 9 (local time), Britain’s Financial Times (FT), citing the Korean government’s statistics, reported that Korean exports of automotive lubricants to Russia soared 116.7 percent in 2022 to US$229 million. Citing Russia’s import data, the U.K. newspaper also claimed that SK enmove and GS Caltex, a joint venture between the GS Group of Korea and U.S. energy giant Chevron, were the main beneficiaries.
According to the data, the two companies’ engine oil exports to Russia peaked at US$28 million in March this year, up from US$2.8 million in January in 2022 before Russia’s full-scale invasion of Ukraine. SK enmove accounts for 6.5 percent of Russia’s total automotive lubricant imports, while GS Caltex does 5 percent.
The FT attributed this to the fact that Western companies such as TotalEnergy, Shell, and BP voluntarily scaled back their business operations including the sale of automotive lubricants in Russia following the outbreak of the war in Ukraine, and Korean companies filled the void. It also raised suspicions that the lubricants exported to Russia by these companies may have been used for military purposes such as fuel for Russian tanks and armored vehicles.
In response, the two companies told the FT that the lubricants exported were not sanctioned for civilian use and could not be diverted for military purposes.
However, the FT quoted experts as saying that there is nearly no way to find out whether automotive lubricants exported to Russia were diverted for military use. “All petroleum products can be used for both civilian and military purposes,” said Patrick Donahoe, a former deputy commander of the U.S. Eighth Army. “Selling petroleum products to Russia is aiding Russia’s invasion of Ukraine.”
The two companies countered that the goods they were exporting to Russia were not subject to sanctions. They were also not authorized for military use, so there is no way they could be diverted.
GS Caltex emphasized that the contract prohibits their resale. “There is a separate specification for oil supplied to the Russian military,” the company said. “But only Russian products are approved, so it is structurally impossible to supply our products to the Russian military.”
“The FT report is groundless,” SK enmove said. “When we sell lubricants for automobiles, we thoroughly check which company we sell them to, and we do not sell products for military supplies or tanks to Russia.”