S.Korea's S-Oil expects firm refining profits in 2017
SEOUL (Reuters) -- South Korea's S-Oil Corp expects healthy refining profits this year, buoyed by growing demand for oil products in places such as China and Southeast Asia.
The country's third-largest oil refiner said in a quarterly earnings statement on Thursday that global oil demand would grow soundly in 2017, although the rate of increase could ease slightly from last year.
"Healthy margins are expected as 1.32 MMbpd of oil demand growth will outstrip an incremental net capacity increase of 574,000 bpd," the company said, referring to the profit margin on refining barrels of crude oil.
Inventory gains and a recovery in refining margins helped S-Oil, whose top shareholder is Saudi Aramco, notch up a $386 million profit in the last quarter of 2016, compared with a loss of 42.9 billion won the year before.
S-Oil treasurer Shin Kwan-bae said on a call with analysts that the company expected the official selling price (OSP) for Arab Light crude, supplied by Saudi Arabia, to remain steady in Asia from last year.
He said that even if Middle Eastern crude supply drops in the wake of a deal by producers to curb output, Saudi Arabia would not want to harm its market share in Asia by increasing OSPs.
A company official said S-Oil planned to carry out less scheduled maintenances this year, limiting such work to a condensate fractionation unit (CFU) and a No.2 paraxylene unit. He did not give further details.
Industry sources have said S-Oil would shut down its No.1 residue hydro desulphurisation unit (RHDS) and crude oil refining unit in April for about a month.
S-Oil also said on Thursday that its 2018 expansion project was on track to complete in the first half of next year.
Under the project, the company will build a residual fuel oil upgrading system and an olefin production system that will churn out 405,000 t of polypropylene a year, along with other products.
Reporting by Jane Chung; Editing by Stephen Coates and Joseph Radford
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