The secret to S-Oil’s 4Q surplus..”New advanced facilities hit”

The appearance of S-OIL headquarters. [중앙포토]

It was announced on the 14th that the effect of the refinery and petrochemical facilities invested by S-OIL is appearing in earnest. Self-evaluation is that the secret to making a surplus among the four domestic oil refineries in the fourth quarter of last year was due to such facility investment.

S-OIL posted sales of 4.28 trillion won and operating profit of 93.1 billion won in the fourth quarter of last year. By business sector, the oil refining business incurred losses (89.7 billion won) due to a decrease in oil consumption due to the novel coronavirus infection (Corona 19). However, the petrochemical (72.7 billion won) and lubricating base oil (11.1.1 billion won) businesses were good.

A S-Oil official said, “Amid the decline in demand for petroleum products and a decline in refining margins due to the spread of Corona 19, the strategy to maximize the production of profitable products such as petrochemical raw materials propylene oxide and lubricant base oil worked.” Propylene oxide is a raw material for polyurethane, which is widely used as interior materials for automobiles and home appliances.

In fact, the propylene oxide spread in the fourth quarter of last year recorded 1098 dollars per ton, up 85% from the third quarter (595 dollars). S-OIL plans to increase production of propylene oxide.

The new upgraded facility, which started operation in 2018, is also considered to be the facility that led the surplus management. In particular, the residual oil upgrade facility produces gasoline and additives for high-end gasoline using heavy residual oil, which is cheaper than crude oil.

S-OIL predicted that earnings improvement will begin in earnest from this year. This is because the new advanced facilities have entered the stabilization stage, and major production facilities completed regular maintenance last year, so there is no shutdown this year. An official from S-Oil said, “As demand for petroleum products recovers following the corona 19 vaccination, we expect refining margins to gradually improve.” “As demand in Asia is expected to recover faster, business performance is expected to improve rapidly. There is” he said.

Reporter Kiheon Kang [email protected]