S-Oil sees Q4 refining margins rise on seasonal demand, tight supply

MOSCOW (MRC) -- South Korea's S-Oil Corp said on Friday it expected fourth quarter refining margins to rise on higher seasonal demand and tight regional supply and with the start of its new refining and petrochemical plants supporting earnings, as per Hydrocarbonprocesing.

Singapore refining margins, the benchmark profits for Asian oil processors, rose to USD7.99 a barrel on Aug. 15, the highest since margins rebounded in July, supported by rising demand for gasoline and jet fuel. The profits from refining a barrel of benchmark Dubai crude into fuel currently stands at USd5.23 a barrel.

Asian gasoil margins hit their highest in more than three years on Wednesday, pushed higher by lower supplies in region and expectations for increased gasoil demand as consumers move to meet stricter marine fuel regulations.

"The seasonal demand growth and limited capacity expansions in Asia Pacific will further boost the refining margin," the refiner, whose top shareholder is Saudi Aramco, said in an earnings statement. The company said heating oil demand will increase refining margins as winter approaches.

S-Oil posted a 42.9 percent decline in operating profit to 316 billion won (USD277.67 million) for the July-September period, due to reduced inventory-related gains and despite improved refining margins. Operating profit was down from 553 billion won in the same period a year earlier.

The company also said its new residue fuel oil and olefin plants, known as the residue upgrading complex and olefin downstream complex (ODC), are expected to begin commercial operations in November.

The new units will churn out 405,000 tonnes per annum (TPA) of polypropylene, 300,000 TPA of propylene oxide, and 21,000 barrels per day of gasoline.

"Commercial operations of the RUC-ODC project are expected to contribute to Q4 earnings .... (their) stable operations are secured at maximum designed capacity," company treasurer Shin Kwan-bae said in a call with analysts.
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MOSCOW (MRC) - Saudi Arabia expects to attract investments of more than 1.6 trillion riyals (USD427 billion) by 2030 in its push to boost industry, Energy Minister Khalid Al-Falih said on Thursday, according to state TV al-Ekhbariya, as per Reuters.

"The programme to develop national industries and logistics services (is) the largest and most important, and has a huge impact on the Saudi economy," Al-Falih said.

The minister estimated that the country's mineral wealth was worth more than 1.3 trillion riyals.

As MRC informed before, Saudi Aramco’s potential acquisition of a stake in petrochemicals maker SABIC would affect the timeframe of its own planned initial public offering, the firm’s chief executive, Amin Nasser, said in a TV interview in late July 2018.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
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MOSCOW (MRC) -- Biofuel producer and oil refiner Neste is "on the crest of a wave", its CEO said after the company set a December deadline for an investment decision on a new Singapore plant and posted quarterly results that sent its shares up by 9 percent, as per Reuters.

The Finnish company, which produces diesel and other fuels from renewable materials at plants in Singapore and Rotterdam, reported bigger than expected third-quarter profit thanks to progress at its renewables operation. "Renewable products exceeded the previous year's performance as a result of a favourable market and successful margin optimisation," CEO Matti Lievonen said in a statement.

Third-quarter core operating profit rose to 395 million euros (USD449 million) from 350 million euros in the same period last year, surpassing the consensus forecast of 356 million euros in a Reuters poll of analysts. Neste said it was on track for a "very strong" full year, though maintenance shutdowns will squeeze profit in the remainder of the year.

"This is a very strong result, especially in renewables ... they clearly succeeded in sales, production and raw material purchases in that business," said OP Bank analyst Henri Parkkinen, who has a "reduce" rating on the stock.

Neste, which also has two conventional oil refineries in Finland, is looking for future growth in renewable jet fuels and said it would make a final decision in December over its plan to build a new biofuel plant in Singapore. "We will decide in December," Lievonen told Reuters "We have been working on the investment constantly and spent tens of millions preparing."

The company had previously said it would make a final investment decision by the end of 2018. "Based on what's happening in the renewables market, that investment has always looked justified," said OP Bank's Parkkinen.

Neste CEO Lievonen says the company's strategy has been further supported by the much-publicised recent report from the United Nations Intergovernmental Panel on Climate Change (IPCC).
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MOSCOW (MRC) -- Saudi Aramco aims to allocate some 2-3 million barrels per day of its crude oil production to petrochemicals, CEO Amin Nasser said on Tuesday, a sign the state energy group is hedging its bets against a possible demand slowdown, as per Hydrocabonprocessing.

Aramco has been boosting its investments in refining and petrochemicals to secure new markets for its crude, as it sees growth in chemicals central to its downstream expansion strategy. The company is working on buying a stake in Saudi Basic Industries Corp (SABIC), the world's fourth largest petrochemical maker, as part of plans to become a leader in the chemical industry, Nasser told an investment conference in Riyadh.

But anti-trust regulations abroad will mean that the company's planned acquisition of a controlling stake in SABIC will take time, he said, noting that SABIC has a presence in 50 countries around the world. Aramco hired JP Morgan and Morgan Stanley to advise on a potential acquisition of as much as 70 percent stake in SABIC, currently held by Saudi Arabia's Public Investment Fund, sources told Reuters in July.

Nasser said the Saudi Arabian government was still committed to an initial public offering of Aramco, while the timing depended on market conditions and other factors. He added that Aramco could not list while the SABIC deal was ongoing. Nasser also said bankers had not expressed any concerns about a recent rise in Saudi funding costs ahead of the company's potential acquisition of the SABIC stake.

The cost of insuring against a Saudi sovereign default over the next five years touched 100 basis points last week for the first time since June, showing how the killing of journalist Jamal Khashoggi has damaged sentiment toward the country. Asked whether bankers raised any concerns about the death of Khashoggi or whether it would cause higher funding costs for the deal, Nasser said: "None whatsoever."

"Aramco is well positioned financially," Nasser told reporters on the sidelines of an investment conference in Riyadh. "So far we have no issue to finance any of our projects. I don't anticipate seeing any issues in financing." He also said it would take Aramco three months to reach maximum oil production capacity of 12 million bpd, if needed.

Aramco plans to raise its refining capacity to between 8 million and 10 million barrels per day, from some 5 million bpd now, and double its petrochemicals production by 2030. Aramco pumps around 10.7 million bpd of crude oil.
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MOSCOW (MRC) -- Independent oil refiner Phillips 66 beat analysts' estimates for third-quarter profit on Friday, as cheaper domestic crude prices boosted its refining margins, Reuters.

Margins for most independent U.S. refiners, which process heavy crude from countries such as Venezuela and Canada into diesel, gasoline and other products, have been boosted as U.S. crude's discount to Brent widened to more than USD10 a barrel.

The spread has widened on transportation constraints, that led to steeper discounts for Canada's oil than U.S. crude, which analysts say benefits refiners in the midwest that process a higher volume of Canadian crude than those on the Gulf Coast.

Houston-based Phillips 66 primarily operates in the midwest and southwest region of the United States. The company said earnings from its refining business, its biggest, rose 70.2 percent to USD936 million.

Consolidated earnings rose to USD1.49 billion from USD823 million. The company's adjusted earnings rose to USD1.46 billion, or USD3.10 per share, in the third quarter, from USD858 million, or USD1.66 per share, a year earlier.

Analysts on average had expected the company to earn USD2.48 per share on an adjusted basis, according to Refinitiv data.
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