South Korea's Oil Refiners Suffer Third Straight Year of Decline

South Korea's major oil refineries witnessed a decline in production and exports for the third consecutive year in 2003, attributing the slump to a decrease in domestic oil consumption, tightened environmental restrictions, and increasing demand for clean energy. Market watchers and experts pointed to the world economic recession and Southeast Asian countries' expansion of oil refining facilities as additional factors contributing to the decline. The refineries' operating ratio has significantly decreased, with the lowest recorded in 2003 since 1990.

Key Takeaways:

• The five major South Korean oil refiners (SK Corp., LG-Caltex Oil Corp., S-Oil Corporation, Hyundai Oilbank Corp., and Incheon Oil Refinery Co.) saw their combined production decrease from 926.9 million barrels in 2000 to 765.48 million barrels in 2003.
• Exports from these refiners declined from 306.29 million barrels in 2000 to 193.19 million barrels in 2003.
• The operating ratio of these refineries' production facilities dropped from 99.8% in 2000 to 87.4% in 2003.
• SK Corp. and S-Oil leading the industry's recovery with expectations of increased production and operating ratios.
• Oil refineries' operating ratio in 2003 was the lowest since 1990, according to a Korea National Oil Corp. official.

Statistics:

• Combined production (2000-2003): 926.9m, 907.35m, 858.36m, 765.48m barrels
• Exports (2000-2003): 306.29m, 295.01m, 239.12m, 193.19m barrels
• Operating ratio (2000-2003): 99.8%, 96.7%, 88.4%, 87.4%
• Lowest operating ratio since: 1990

Sources:

• Asia Pulse, Seoul, Jan 13
• Korea National Oil Corp. (KNOC)
• Yonhap news agency
• KSE:03600 (SK Corp.)
• KSE:10950 (S-Oil Corporation)