Soaring refinery profits delay oil unit shutdown

SK Corp., Korea’s largest oil refiner, will delay a maintenance shutdown of its No. 5 crude distillation unit in Ulsan by about 10 months because of surging profits from processing crude oil into fuel.
The refiner will delay a planned closure of the 260,000 barrel-a-day unit until April because it underwent maintenance in 2005 and “there’s no rush” now when refining margins are “good,” Katharine Kho, the Seoul-based company’s spokeswoman said yesterday by telephone. The closure was due to start this month.
Outages at U.S. refineries have driven margins on processing oil to the highest since Hurricanes Katrina and Rita disrupted fuel supplies on the Gulf Coast in September 2005, AG Edwards & Sons Inc. said in a report last month. Those gains have fed through to Asia and Europe as the U.S. increased gasoline imports.
“It makes sense to increase operating rates when refining margins are good,” said Cha Hong-sun, an analyst at Seoul Securities Co.
Margins in Singapore, Asia’s biggest oil-trading center, have gained 49 percent in the second quarter, averaging $11.66 a barrel from $7.83 a barrel in the first three months of the year, Merrill Lynch & Co. said in May.
The exact dates and length of the shutdown next year will be decided later, the company said in an e-mail. SK Corp. had planned to close the unit for 38 days between June 4 and July 11, according to a statement.
A crude distillation unit is the main refinery facility that processes crude oil into petroleum products like gasoline and kerosene.
Bloomberg