President Nasser Al-Mahasher of S-Oil Corp recalled that the oil refinery accomplished a great deal last year in its operational areas, despite the difficult global economy including the steep fall in the price of oil prices. He said management was tightened successfully in all operational targets. In his New Year’s message on Jan. 4, CEO Al-Mahasher said the oil refinery successfully completed three overhauls of its major oil refining facilities last year.
S-Oil has been able to secure a larger share of the oil retail market in Korea with its strategic marketing campaign “the SUPER Project” beginning to have an economic effect, the CEO said.
The oil company has been able to restructure its organization to cope with changes in the managerial environment, he said. However, the most important changes last year were that the RUC and ODC Projects gained the board of directors’ approval and got rolling as a result of the hard work on the preparation of the projects, despite the global economic downturn and an uncertain managerial environment.
S-Oil, the country's third largest oil refiner, will invest as much as 8 trillion won to build a petrochemical facility in Ulsan by 2017, the government said last year.
As a first step, S-Oil plans to invest 5 trillion won to build a heavy-oil upgrading system and comprehensive petrochemical facility by 2017. The company expects to strengthen its research and development, and build an advanced refining facility to enhance profitability.
CEO Al-Mahasher laid out a four-point management plan for this year. First, the oil refinery will do its best to complete the RUC and ODC Projects, considered to be the largest projects the oil company will undertake since the start of its operation. Second, every one working for the RUC and ODC Projects will do his utmost for safety, saying that the results attained without regard to safety cannot of help to the company. Those who work for the projects should also be careful about the procedures for the safety regulations to protect not only themselves, but also the company from dangers so that the projects will be completed with “zero accident.”
Third, he called for securing a competitive edge for S-Oil in marketing by expanding the number of customers for its oil products, while demand for oil has fallen and competition among oil refiners has heated up. “We have to do our best in domestic oil market in Korea with creative marketing moves and reformative marketing pitches,” Al-Mahasher said.
S-Oil sees 2016 refining margins staying healthy and Asian refiners will benefit from growing oil demand this year that outpaces increases in refining capacity, the company said on Jan. 28. Surging refining margins for petroleum products helped boost fourth quarter 2015 net income to 80.6 billion won ($66.67 million) versus a loss of 272.2 billion won a year ago, the company said in an earnings statement to the Korea Exchange.
Full year income was 676.6 billion won against a loss of 287.8 billion won a year ago.
Refining margins in 2016 will stay healthy as global incremental oil demand will outpace new refining capacity additions during the year, S-Oil, the country's third-largest refiner, said in the statement. The company cited forecasts calling for over 1 million barrels per day (bpd) of new demand in 2016 against only 406,000 bpd of new refining. Still, S-Oil considers major risks this year in the continuing Chinese economic slowdown and the potential for faster-than-expected U.S. interest rate hikes that could limit oil demand, said Bang Ju-wan, S-Oil's head of finance, in a call on the earnings.
"With oil prices already low at $25-$26 a barrel in terms of Dubai crude, we don't expect oil prices to make additional weakness and accordingly hurt the company's performance," said Bang. "Yet if such risks continue long, it could slow down oil demand and worsen market margins." Bang was referring to the Chinese economic slowdown and U.S. rate hike factors. S-Oil is currently maximizing gasoline output, as its margin is healthier than that of diesel, said Bang, adding that gasoline output will increase dramatically in 2018 once its expansion project is completed. The company will add a residual fuel oil upgrading system and an olefin production system through 2018 that will produce 405,000 tonnes per annum (TPA) polypropylene, 300,000 TPA of propylene oxide, and 21,000 bpd of gasoline. S-Oil plans to shut its No.1 crude distillation unit (CDU) and a residue fluid catalytic cracking unit this year for maintenance, without providing exact timeline for the shutdown, it said in the statement.
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