Low oil prices deal SK Energy record loss

SK Innovation, the nation’s largest oil refiner, posted a 105.4 billion won ($92.5 million) operating loss in the second quarter, the first time in a decade, according to the company yesterday.

Total sales were 18.9 trillion won, a 10 percent on-year rise.

The holding company’s loss was largely due to the largest ever quarterly operating loss suffered by oil refinery subsidiary SK Energy in the second quarter. The subsidiary suffered from a sharp drop in global oil prices during the quarter.

Global crude prices hit the year’s low at $89.15 per barrel in June after a high of $124.22 per barrel in March.

SK Energy had a 459.7 billion won operating loss in the quarter, a 557.1 billion won drop from the same period last year. However, SK Energy’s sales hit a record of 14.6 trillion won, up 21 percent from a year earlier.

“Exports of oil products were the highest in the company’s history, but an almost $30 drop in crude prices reflected in oil inventory management dragged down the overall operating loss,” said an official at SK Innovation.

SK Innovation’s two other subsidiaries, SK Chemical and SK Lubricants, had operating profits of 164.2 billion won and 87.3 billion won respectively.

“Even though the non-refining divisions have done well, the deficit at SK Energy led SK Innovation to an operating loss,” said an official at SK Innovation.

“It’s not easy to have a positive outlook for the second half of the year due to many fickle market conditions domestically and globally, but the company will focus on gaining its competitiveness back,” he said.

The nation’s third largest oil refinery S-Oil said yesterday it recorded a 161.2 billion won operating loss in the second quarter while its total sales rose by 9.6 percent from a year earlier.With crude price around $100 per barrel, analysts expect the oil refineries to recover in the third quarter.

By Lee Sun-min [summerlee@joongang.co.kr]