Korean oil refiners to drive eco-friendly projects on record earnings

[Courtesy of Hyundai Oilbank]

South Korean oil refineries are expected to speed up environmentally-friendly and petrochemical business projects this year after their best-ever earnings performance last year amid oil market volatility.

On Tuesday, SK innovation Co., Korea’s largest oil refiner, announced that it posted 78.05 trillion won ($62 billion) in sales and 3.99 trillion won in operating profit last year. The numbers are an increase of 66.6 percent and 129.5 percent, respectively, from the previous year.

Hyundai Oilbank Co. said on the same day that it recorded 34.95 trillion won in sales and 2.78 trillion won in operating profit last year. Sales jumped 68.0 percent on year as oil prices rose and refining margins improved. Operating profit more than doubled from the previous year.

Another oil refiner S-Oil Corp. earlier announced record earnings for last year. The company logged 42.44 trillion won in sales and 3.40 trillion won in operating profit.

The good performance was attributed to strong recovery in oil demand amid supply disruptions caused by a shortage of refinery facilities and geopolitical risks last year. According to market data, exports of petroleum products by the domestic oil refining industry reached a record $570.3 billion last year.

The war between Russia and Ukraine caused disruptions in the global oil supply and raised the price of petroleum products. The local refining industry increased factory utilization to 79.4 percent, the highest since the pandemic.

This year, the European Union’s sanctions on Russian oil refinery products and China’s reopening are expected to boost the industry’s refining margins. A recovery in global jet fuel demand is also helpful to the industry. Oil refining margins are expected to remain strong this year as the Ukrain-Russia war continues.

Meanwhile, local oil refiners are expanding lucrative petrochemical business, while strengthening their eco-friendly business projects.

Hyundai Oilbank aims to complete the construction of a biodiesel manufacturing plant this year, which will have an annual capacity of 130,000 tons on a site of 10,000 square meters in Daesan.

During a conference call on Tuesday, SK innovation said it made progress in new green business projects such as small modular reactors, ammonia-based fuel cell systems and solid waste gasification. S-Oil is pushing for a 9-trillion-won “Shaheen” project to expand its petrochemical business.