SK Energy shuts crude distillation unit due to poor margins

26 August 2009 14:47  [Source: ICIS news]

SINGAPORE (ICIS news)--SK Energy shut down a crude distillation unit (CDU) at its 840,000 bbl/day Ulsan refinery on Wednesday due to poor refining economics, a source close to the South Korean refiner said on Wednesday.

The company shut down the 240,000 bbl/day CDU No 4 on 26 August and the unit was expected to remain offline until 29 September, the source said.

The source added that with the shut down of the CDU No 4, runs at the Ulsan refinery would be reduced to around 593,000 bbl/day.

SK Energy’s move to shut down the CDU at Ulsan came amid continuing poor demand and high inventory levels for oil products globally, particularly for middle distillates such as gasoil (diesel) and jet kerosene.

On Wednesday, the crack or price spread for September kerosene-Dubai was $8.55/bbl, while the crack spread for gasoil-Dubai for September was around $7.95/bbl. Last year, before the economic crisis, gasoil-Dubai cracks peaked above $40/bbl.

A 75,000 bbl/day CDU at another SK Energy-owned refinery in South Korea had been shut down since March 2008 due to poor economics. Runs at the 275,000 bbl/day Incheon refinery were subsequently reduced to around 52% of capacity.

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By: James Dennis
+65 6780 4359



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