This topic contains 0 replies, has 1 voice, and was last updated by Anonymous 15 years, 2 months ago.
December 17, 2005 at 3:15 am #4278
Nov. 30 (Bloomberg) — S-Oil Corp., partly owned by Saudi Arabia, may spend as much as $3.5 billion to build a refining unit in South Korea to increase fuel production and tap rising demand in China.
Saudi Arabia’s Crown Prince Sultan bin Abdulaziz said he would order
active” consideration of a plan to build a so- called cracker, South Korea’s Ministry of Commerce, Industry and Energy said in a statement yesterday, citing comments by the prince to South Korean Prime Minister Lee Hae Chan in Riyadh on Nov. 28.
S-Oil’s plan may boost spending by South Korean refiners to as much as $9.5 billion over the next three years as demand increases from China, the world’s fastest-growing fuel market. Profit from processing each barrel of oil into gasoline and other fuels rose to a record in Asia this year.
This is no doubt positive because margins are good and are unlikely to fall before 2010 because of high fuel prices,” said Lee Jeong Hun, an analyst at Korea Investment & Securities Co. in Seoul.
Any overcapacity can be exported to China where demand will continue to exceed supply.”
Adding plants in South Korea, which has the world’s fifth- largest refining capacity, will increase demand for high-sulfur crude oil produced by Saudi Arabia. South Korea sold $10.2 billion of oil products overseas last year, the sixth-largest exports for the country.
S-Oil shares have risen 13 percent this year, less than the 45 percent gain in the benchmark Kospi Index. The stock rose 100 won, or 0.1 percent, to close at 75,800 won in Seoul.
. . .
A surge in refinery capacity in China and South Korea has prompted concern that processing profit may fall, said Hwang Kyu Won, an analyst at Tong Yang Investment Bank in Seoul.
South Korea’s market is already in oversupply and the export environment is becoming more competitive as China continues to expand its own capacity,” Hwang said.
It may be better for S-Oil to hold off its investments for now.”
The South Korean energy ministry’s statement didn’t say how the investment will be funded and when the plant may be built.
SK Corp., South Korea’s biggest refiner, may invest about $2 billion building a fluid catalytic cracking unit and GS Caltex Corp., a venture between GS Holdings Corp. and Chevron Corp., will spend $1.5 billion in plants by 2007. Hyundai Oilbank Co. may make investments worth about $2 billion, analyst Hwang said today.
To contact the reporter on this story:
Meeyoung Song in Seoul at email@example.com.
You must be logged in to reply to this topic.