Direct fuel purchase service shuts down

A U.S.-based start-up claiming it can enable South Korean consumers to directly purchase gasoline and diesel fuel from overseas vendors has terminated its beta service one day after its official launch.

Jirm had opened its beta website -- www.jirm.com -- in Korea on Monday, referring to itself as the world’s first company to help consumers order fuel directly from Saudi Arabia at lower-than-market prices.

Following legal issues raised by state authorities and industry officials, the firm shut down its service the next day, citing unforeseen legal hurdles in importing fuel from oil-producing countries for individual use.

“We initially began our service following confirmation from the Korean tax authorities that (individually bought) oil products can legally pass through customs, but they have reversed their statement,” Jirm said in an announcement Tuesday.

“Given the reported absence of regulations governing direct oil purchases, we are unable to continue our service,” the firm said, apologizing for the discontinuation of its service.

Calling itself a Silicon Valley-based start-up, Jirm kicked off its service locally on Monday, drawing both sizeable public attention and scrutiny from the local oil industry.

Users could order up to 120,000 won ($97.20) worth of gasoline or diesel, which would be delivered from Saudi Arabia to Korea within 10 to 15 days, according to the firm.

After passing through customs, Jirm would send, within three hours or longer, a fueling truck directly to the user’s vehicle location for a delivery charge of 2,500 won.

As of Wednesday, Jirm’s gasoline sale price stood at 1,027 won per liter, with diesel at 792 won per liter, including import costs and taxes. This is around 300 won cheaper than the current average market price compiled by the Korea National Oil Corp.’s Opinet.

An official from the Korea Petroleum Association raised “doubts about the viability of Jirm’s pricing policy and business agenda,” citing some 900 won in fuel and import taxes levied per liter of gasoline as well as strict government regulations on fuel storage.

By Sohn Ji-young (jys@heraldcorp.com)