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August 01, 2009
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| S-Oil Corp., Korea’s third-biggest oil refiner, announced its second-quarter profit fell 81 percent, missing analyst estimates, on a drop in demand for diesel and jet fuel. Net income declined to 72 billion won ($58 million) in the three months ended June 30 from 368.6 billion a year earlier, the company said in a regulatory filing yesterday. Global refining margins, or profit from making fuel, declined 66 percent from a year earlier to $4.98 a barrel in the second quarter, according to BP Plc data. SK Energy Co., S-Oil’s bigger rival, reported lower-than-expected profits last week because of losses from oil processing. “Demand for oil products in Asia will improve in the fourth quarter helped by the economic recovery and seasonal demand,” S-Oil said in a statement. The company expects Asian demand to rise 5 percent in the fourth quarter from the current quarter. S-Oil’s second-quarter operating profit dropped 94 percent to 42.2 billion won, while sales declined 38 percent to 4.1 trillion won. S-Oil’s refining division posted a 26 billion won operating loss after the spread between diesel and Dubai crude oil dropped 81 percent. That figure measures the price difference between Korea’s benchmark and finished diesel. “I don’t see a big turnaround in the fundamentals for the refining business,” said Lee Jung-heon, an analyst at Hana Daetoo Securities. “Margins will not fall further from the current level but may not rebound sharply” because of increased supply from China and India, he said. Reliance Industries Ltd., India’s biggest company by market value, started processing crude at a new export-oriented, 580,000 barrel-a-day refinery on Dec. 25. China National Offshore Oil Corp., the country’s biggest offshore petroleum explorer, began operating its Huizhou oil refinery in May. Bloomberg |
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