Oil Processing

Oil Refiners See Good Times ahead due to Rising Oil Prices

International oil prices have hit a record high in seven months as they went up over US$50 a barrel. The domestic oil refining sector raised its hopes of improving their profitability in the third quarter after suffering poor results for two consecutive quarters. The spot price for Dubai crude as compiled by the Korea National Oil Corp. was $53.64 a barrel on September 16, up by 7 cents from the previous day. This is the highest level since February this year when the figure was $54.39. The recent hike in oil prices was led mainly by expectations that demand would increase. The Organization for Petroleum Exporting Countries and the International Energy Agency adjusted their demand outlook upward to 96.77 million barrels and 97.73 million barrels, respectively, a day on average, up by 50,00...

Daewoo E&C Wins Super Large Oil Refinery Construction Project from Oman

On July 7, Daewoo E&C announced that the company won Package 1 of the Duqm Refinery project by forming a joint venture with Tecnicas Reunidas (TR), a Spanish engineering procurement construction (EPC) company. Daewoo E&C will jointly execute EPC (engineering, procurement, construction) with TR. Its equities are US$962.5 million or 35%. It will take 47 months to finish the work. Daewoo E&C had its technological prowess recognized in Oman by successfully completing the construction of a breakwater in Oman in 1999, the Duqm Shipyard in 2011 and a 2,000MW power plant which is largest in Oman in 2015. Its partner company TR, is a Spanish construction company with a wealth of experience in the construction of refineries. Based on local experience and know-how, Daewoo E&C is expec...

Korea-Japan Consortium Signs Basic Contract on Oil Refinery Project in Iran

Aconsortium including Daelim Industrial and Hyundai E&C, has signed a basic contract to push forward with an oil refinery project in Siraf, Iran. According to state-run IRNA News Agency of Iran on July 17, the Korea-Japan consortium consisting of Daelim Industrial, Hyundai E&C, and Chiyoda of Japan, signed an HOA on the construction of a US$ 3 oil refinery project in the Siraf area, Bushehr Province of Iran. An HOA refers to a basic contract for the main conditions for project implementation which has a pre-contractual nature. An HOA is likely to lead to the main contract but does not mean that the order has been confirmed. The project will be conducted by the Export Credit Agency (ECA) method. The cost of the project will be paid by the ECAs in Korea and Japan and the ECAs will re...

Korean Oil Refiners’ Margin Hit This Year’s High

It has been found that South Korean oil refining companies’ refining margin recently hit this year’s high based on an increasing demand for diesel in China and Europe. For instance, the Singapore gross refining margin reached US$7 per barrel in the first week of this month. Previously, the refining margin fell from US$6.9 to US$5.8 per barrel between January and March this year and moved between US$6 and US$6.9 in the second quarter, raising concerns over a decline in their operating profits. Besides, the international oil price dropped from over US$50 to US$40 or so per barrel in June. This month, however, the refining margin rebounded although the oil price is still low. This is because the diesel refining margin raised the gross refining margin based on the increasing demand in Europe a...

Ophir signs new $250M facility to refinance debt

UK-based oil and gas company Ophir Energy has signed a new $250 million reserve based lending facility (RBL) secured against the group’s producing assets in Southeast Asia. Ophir has a combination of production, development and exploration assets in Asia. In Thailand, Ophir has both oil and gas production and exploration. In Indonesia, Ophir has an onshore gas development and deepwater exploration acreage. The company has further exploration acreage in Myanmar and Malaysia. In addition to the committed $250 million, a further $100 million is available on an uncommitted “accordion” basis, the oil company said in a statement on Wednesday. The RBL has a seven year term and matures on June 30, 2024, and it replaces Ophir’s existing RBL facility which matures in December 2019. The new RBL facil...

S. Korea’s cash-rich oil and chemical firms ready to invest big in 2017

South Korea’s major oil refiners and petrochemical companies richer through leverage on cheap oil prices will dig into their record earnings of last year to invest around $9 billion to expand capacity. According to industry sources on Tuesday, the total capital expenditure pledged by local oil refiners and petrochemical firms for this year comes to 9.6 trillion won, but the figure would exceed 10 trillion won ($8.8 billion) when including investment by Lotte Chemical Corp. and Hanwha Total Petrochemical Co. yet to be disclosed. The combined cash reserves at top eight refining and petrochemical companies – SK Innovation Co., GS Caltex Corp., S-Oil Corp., Hyundai Oilbank Co., Hanwha Total Petrochemical, LG Chem Ltd., Lotte Chemical, and Hanwha Chemical Corp. – reached historic-hi...

GS Energy Acquires Stakes in Indonesia’s Coal Mine

GS Energy and GS Global announced on April 20 that they jointly acquired a 14.74-percent stake in Indonesia’s “BSSR Coal Mine” located in Kalimantan Island. The BSSR Coal Mine consists of two bituminous coal mines stretched from the southern part to the eastern tip of Kalimantan Province.    With an estimated reserve of about 140 million tons, the BSSR Coal Mine has an annual output of about 10 million tons.  GS Energy and GS Global each acquired a 9.74-percent and a 5.0-percent stake in the mine. GS Energy, which gained the right to sell the coal produced in the mines, plans to sell it to Asian countries for industrial and power generation use.    The coal produced at the BSSR Coal Mine is high-quality low-sulfur coal. Since the coal mine is located near the coast, the t...

Oil near flat in strong week for crude

Oil prices were little changed in modest volume on Thursday, during a week in which crude benchmarks recouped more of March’s losses on increased hopes world supply and demand were nearing balance.At the same time, the U.S. oil rig count rose to its highest level in two years, threatening the rebalancing of markets.Energy services firm Baker Hughes said on Thursday that drillers added 11 oil rigs in the week to April 13, bringing the total count up to 683. The number of U.S. rigs has increased for 13 consecutive weeks. [RIG/U]  The market has been oversupplied since mid-2014, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017. With the increasing rig count pointing to rising sup...

China oil giant Sinopec posts 44% jump in net profit

State-owned Chinese energy major Sinopec said 2016 net profit jumped 44 percent, its first annual profit rise in three years, as strong demand and better margins in its downstream refining business helped offset low oil prices. Sinopec –- a listed unit of China Petrochemical Corp –- saw net profit surge to 46.7 billion yuan ($6.8 billion), it said in a statement filed late Sunday to the Hong Kong stock exchange, where it is listed. Asia’s biggest refiner had previously seen profits dive around 30 percent in both 2015 and 2014. Sinopec president Dai Houliang said one reason for the “better-than-expected” results is that “demand for chemicals grew steadily”. While the upstream business was sluggish owing to low international crude oil prices, the downstream refining b...

Oil goods beat semiconductors as largest exports item in Feb.

Petroleum and petrochemical products emerged as the biggest export item for South Korea last month as Chinese and Japanese refiners are reducing exports due to growing domestic consumption, government data showed Friday. Exports of petroleum reached US$2.92 billion and petrochemical goods $3.81 billion in February, according to the data. The combined figure of $6.7 billion is well over $6.4 billion worth of semiconductors shipped out during the same period. The rise in oil and petrochemical goods shipments is partly attributed to China reducing export quotas of such products by 40 percent this year from a year earlier due to growing domestic consumption, industry sources said. Several major Japanese refiners are undergoing regular renovations that have affected output. “Domestic refi...

South Korea’s Public Resource Development Firms to Make Huge Restructuring Plan

  The South Korean government will force state-run energy resource development companies to begin restructuring with an aim to achieve an operating profit this year. The companies will carry out restructuring worth 2.5 trillion won (US$2.17 billion), including an additional sale of non-core assets, by the end of this year. The Ministry of Trade, Industry and Energy (MOTIE) held the third resource development restructuring review committee on March 7 and decided to expand the scope of restructuring, like the reduction of assets of the Korea National Oil Corporation (KNOC) and Korea Resources Corporation (KORES). The two state-run firms will increase the size of restructuring from 1.7 trillion won (US$1.48 billion) last year to 2.5 trillion won (US$2.17 billion) – 1.7 trillion won (US$1...

Aramco golden ticket has risks for Western banks

JPMorgan and Morgan Stanley have been handed the keys to the kingdom. The U.S. investment banks are poised to lead the underwriting of Aramco’s $100 billion share offering. The prized mandate has the potential to propel both to the top of investment banking league tables and unlock a stream of future work as Saudi Arabia reforms its economy and sells off its large inventory of state assets. An IPO flop, however, could be fatal for the banks’ local franchises. The state-owned oil giant is assembling bankers ahead of the listing, which is scheduled for 2018. JPMorgan and Morgan Stanley look set to join boutique firm Moelis, which was appointed as an independent adviser earlier this month, and veteran banker Michael Klein, who has been working for months at Aramco’s headquar...

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