South Korea’s four leading oil refiners SK Innovation Co., S-Oil Corp., GS Caltex Corp. and Hyundai Oilbank Co. are expected to post a combined operating income of around 2 trillion won ($1.7 billion) for the first three months this year thanks to high cracking margins and increasing oil import from Iran.
According to oil refinery industry on Sunday, combined operating profit for SK Innovation, S-Oil, GS Caltex and Hyundai Oilbank is expected to reach between 1.9 trillion won and 2 trillion won in the first quarter ended March this year. This is a more than twofold jump from their combined operating income of 960.1 billion won a year ago and the first time to reach the 2 trillion mark since the first quarter in 2012 with 2.2 trillion won.
According to the market consensus, SK Innovation is forecast to report 700 billion won in operating income, more than double from the previous year, while GS Caltex and S-Oil are projected to post 520 billion and 500 billion won, up 74 percent and 110 percent on-year, respectively.
Hyundai Oilbank is also expected to rake in around 200 billion won in operating profit in the first quarter this year. Such stellar performance of the local oil refiners is attributed to improvement in the refining margin as supply of refined products remains lower than demand. The cracking margin, or the difference between global oil price and the petroleum products, has remained in the top range.
The crude oil shipment from Iran is also adding benefits for the local refiners. A total of 8.81 million barrels of crude oil from Iran where international sanctions against the Middle Eastern country was lifted recently was imported into Korea in February. This is a similar level to 7.26 million barrels in 2011, or before the economic sanctions, and about five times from 1.77 million barrels in December last year.
The price of oil from Iran is generally lower than international oil prices. Currently, SK Innovation and Hyundai Oilbank, among the four major Korean refiners, are importing crude oil from Iran.
< Source: KITA>
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