S-OIL Sees Q3 Operating Profit Surge 68 Percent Year-on-Year
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S-OIL Sees Q3 Operating Profit Surge 68 Percent Year-on-Year
Maintains lower refinery oil stockpile and expects rising demand due to winter heating

26(Sun), Nov, 2023

CEO Anwar A. Al-Hejazi of S-OIL. (Photo: S-OIL)

S-OIL saw its Q3 operating profit improve noticeably on the back of a greater refining margin and rising international crude oil prices. 

S-OIL chalked up 8,999.6 billion won in sales and 858.9 billion won in operating profit in the 3rd quarter of the year, the refinery company said on Oct. 30. 

Q3 sales declined 19.1 percent compared to the same period of the previous year, but operating profit jump 67.9 percent year-on-year on the back of the strengthening of refinery margin, coupled with rising refinery product demand for summer and rising international crude price hikes. 

S-OIL’s refinery business rebounded in Q3 on the back of automobile and flight demand during summer amid the tight supply situation, caused by the disruption of production facilities in the region. 

Current global refinery product stockpiles dropped to a historic low due to the growth of refinery products in the wake of the recovery of transportation demand. 

Dubai crude oil prices rose due to the prolonging of OPEC+’s voluntary reduction period and declining crude oil stockpile, thus contributing to increasing in operating profit. 

Asia’s refinery margin is predicted to maintain solid levels in the fourth quarter of the year on the back of rising winter demand amid expected lower global stockpiles and limited supply rise. 

The Kerosene and aircraft oil spread is expected to be maintained on the back of rising heating oil demand and the continued recovery of travel during winter, and the spread will likely remain due to lower stockpiles compared to previous years. 

The petrochemical business for Q3 maintained solid levels on the back of solid demand for aromatic products for the paraxylene and benzene markets and new demand related to the operation of the region’s new large-sized downstream facilities. 

Olefin downstream markets, such as polypropylene and polyolefin, remained low due to declining demand, caused by the operation of the region’s new facilities and China’s sagging manufacturing economy. 

Paraxylene (PX) and benzene markets for the fourth quarter of the year are expected to be fine-tuned due to rising production of aromatic items, coupled with seasonal easing of the strong petroleum market, and they are predicted to be supported on the back of resuming of downstream facilities after their regular maintenance period. 

PP and PO markets are expected to recover on a gradual basis on the back of improving consumption demand after Chinese national holidays and companies’ readjusting of the operation of facilities in consideration of economical feasibility. 

The lubricant business for Q3 declined over the previous quarter due to slowing off-season demand and major suppliers’ end of regular maintenance, and the sector seemed to recover to the previous average levels. 

The lubricant spread for Q4 is forecast to improve due to tight supply, caused by the readjusting of yield and regular maintenance and gradual demand recovery. 

Meanwhile, S-OIL’s “Shaheen Project,” a petrochemical project in Ulsan, costing 8,258 billion won, is cruising seamlessly as major terms of low-interest borrowings with the largest shareholder and the signing of borrowing agreements had been completed. 

‘Shaheen Project’ to Receive Policy Funds from Shinhank Bank 

S-OIL said on Oct. 19 the company struck a deal to support ESG finance for low-carbon conversion with Shinhan Bank. 

Under the agreement, Shinhan Bank will support S-OIL’s refinery business with large amounts of greenhouse gas emission to transition to low-carbon projects. 

Specifically, Shinhank Bank decided to offer policy funds to the Shaheen Project, being implemented by S-OIL and eco-friendly facilities, such as hydrogen, bio and fuel cell. 

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