S-Oil Corp. wholly owned by Saudi Aramco was the only refiner in Korea to turn out a profit in the final quarter last year thanks to its business portfolio with greater focus on high-end petrochemical business.
The petroleum and refinery company said in a regulatory filing on Sunday that its operating profit reached 93.1 billion won ($84.2 million) for the October-December period, reversing from a loss of 9.25 billion won three months ago and surging 880.5 percent from a year earlier.
Net profit more than quadrupled on quarter and almost tripled on year to 129.7 billion won, while sales added 9.8 percent but lost 33.9 percent, respectively, to total 4.28 trillion won.
S-Oil shares gained 7.13 percent to close at 88,600 won in Seoul trading on Monday.
The refinery business posted an operating loss of 89.7 billion won, but the loss was more than offset by 72.7 billion won profit from its petrochemical unit and 110.1 billion won profit from the lube base oil unit. Its bold investment in upgrading petrochemical facilities paid off, helping it swing back to a profit, the company explained.
S-Oil finished its regular maintenance works at the petrochemical facilities in the third quarter of last year, and its production lines became fully operational from the fourth quarter.
The company started operating its residue upgrading complex (RUC) and olefin downstream complex (ODC) built on investment of total 5 trillion won in 2018. The residue upgrading complex reprocesses residues from the refining process and converts them into high value-added products such as gasoline and propylene.
The olefin downstream complex injects the propylene to produce propylene oxide (PO) and polypropylene (PP), a raw material for automotive interior materials, electronic products and insulation materials.
Using the upgraded facilities, S-Oil has accelerated production of mainstay products, PP and PO, in the final quarter on expectations for a recovery in global demand for olefin items driven by stimuli actions from various countries to fight against the pandemic slowdown. The company now expects a further growth this year, buoyed by a recovery in refining margins on rising demand for petroleum products as well as strong sales of chemical goods with the arrival of virus vaccines.
S-Oil this year will resume its phase 2 Shaheen project this year to construct a mixed-feed cracker to produce olefins with capacity of 1.5 million tons of ethylene and other petrochemical raw materials per year. It will kick off basic design of the project in the latter half of this year and make the final investment decision by the second half of next year.
By Choi Keun-do and Lee Ha-yeon
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