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South Korean spot fuel oil exports to drop in August

South Korean spot fuel oil exports to drop in August

Seoul: South Korea's spot fuel oil exports are to decrease by 16% in August as compared to July, led by a cut in fuel oil production by the country's top refiner SK Energy, reports Reuters. The country's four refiners - SK Energy, GS Caltex Corp, S-Oil and Hyundai Oilbank Corp - are slated to cut overall spot fuel oil exports to 260,000 tonnes in August, down from 310,000 tonnes in July.

SK Energy, which usually supplies a third of South Korea's total fuel oil needs, has increased internal use of the heavy oil to manufacture lucrative lighter oil products as part of its new residual fluid catalytic cracker (RFCC) in June. The resulting downturn in supplies for the domestic market, has led S-Oil Corp and Hyundai Oilbank to cut spot exports to compensate, industry sources said.

Despite crude refining capacity of 1.115m barrels per day (bpd), the largest in the country, SK Energy's performance was hit earlier this year a drop in values for fuel oil as compared to crude oil. Some industry sources said that the refiner would have to cut its fuel oil production by half with steady operations at the new RFCC, prompting other refiners to make further cuts in exports to meet demand from domestic utilities that use heavy fuel oil for power generation.

With the start of the 60,000 bpd No.2 unit, SK Energy has already imported 80,000 tonnes of fuel oil for end of July arrival to make up for the volumes used for gasoline. South Korea uses an average 700,000 tonnes of bunker fuel a month, mostly for utility purposes.  [01/08/08]