InterviewS Korea's S-Oil eyes refinery upgrade amid complex market

11 June 2013 15:50  [Source: ICIS news]

By Pearl Bantillo

KUALA LUMPUR (ICIS)--South Korean refiner S-Oil is considering upgrading its refinery operations to convert heavy fuel to lighter product amid a challenging market environment, a company executive said on Tuesday.

"We consider some residue upgrading in the near future. Currently, we are studying the economics and marketabilities," S-Oil executive vice president for marketing and sales Yul Ryu told ICIS on the sidelines of the 17th Asia Oil & Gas Conference (AOGC).

He declined to elaborate, saying that the company is looking at a number of options and that it is too early to determine the required investment in this undertaking.

"Once the review is done, we will make a decision during the next year," he said.

In his AOGC presentation, Yul said that Korean refiners face challenges of shrinking margins and tight competition.

In their home country, Korean refiners are dealing with sluggish oil demand that is likely to continue going forward, he said.

Huge refining capacity additions expected in the coming years, as well as potential competition from the US in the Asia-Pacific region, would negatively impact refining margins, he added.

However, Yul said challenges come with opportunities, citing the closure of uncompetitive refineries in Australia and Japan which has consequently boosted the oil products imports into these countries that the South Korean refiners serve.

S-Oil plans to export more to Japan and Australia and is looking at southeast Asia, whose steadily growing demand is backed by strong economic growth, Yul said.

On the petrochemical front, S-Oil expects demand for paraxylene (PX), particularly from China, to remain relatively firm up to next year with huge downstream purified terephthalic acid (PTA) capacities that came on stream in the country.

"In China, we are a big player in paraxylene. The shortfall of [PX] products will still be sustained for a few years until the additional capacities come online," Yul said.

"Up to next year, we'll still be okay," he said.

By: Pearl Bantillo
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