S-OIL Weathers Middle East Supply Disruptions... Q3 Operating Profit Hits KRW 1.4067 Trillion

Refining margins and base oils shine ... Strong third-quarter results

Revenue of KRW 11.9687 trillion; operating profit up 513.7% year on year

S-OIL posted operating profit of more than KRW 1.4 trillion in the third quarter of this year. Operating profit grew more than sixfold from the same period last year, as higher international oil prices and strong export refining margins were further bolstered by profitability in the lubricants business.

S-OIL announced on Nov. 2 that it recorded revenue of KRW 11.9687 trillion, operating profit of KRW 1.4067 trillion and net profit of KRW 1.4356 trillion in the third quarter. Revenue rose 42.2% from a year earlier, while operating profit and net profit increased 513.7% and 2,171.3%, respectively.

Results also improved substantially from the previous quarter. Revenue rose 5.5%, while operating profit increased 45.8% and net profit climbed 179%. For the first nine months of the year, revenue totaled KRW 32.2549 trillion, operating profit KRW 3.6027 trillion and net profit KRW 2.6712 trillion.

The refining and lubricants businesses drove the improvement. In the refining business, international oil prices rose amid geopolitical tensions in the Middle East, while continued shortages of refined products kept refining margins high. In the lubricants business, profitability improved as supply of base oils fell due to production disruptions and logistical constraints in the Middle East.

By business segment, the lubricants division posted the highest operating profit at KRW 742.7 billion, followed by the refining division with KRW 690.4 billion. The petrochemical division, meanwhile, reported an operating loss of KRW 26.4 billion. Spreads for aromatic products improved as supply declined and demand recovered, but profitability weakened for polypropylene (PP) and propylene oxide (PO) amid rising supply and seasonal weakness in demand.

Stable operations despite geopolitical tensions in the Middle East also supported results. S-OIL secured crude oil through various channels, including existing long-term contracts, alternative crude sources and swaps involving loans of government stockpiled crude oil. It also responded to supply disruptions by flexibly using different transportation methods and routes, including ship-to-ship (STS) crude oil transfers.

The company expects the refining business to remain strong in the fourth quarter, supported by low global inventories and rising demand for heating oil. It also forecasts continued tight supply and demand for the lubricants business, particularly Group III base oils. In petrochemicals, market conditions for aromatic products are expected to remain favorable, while increased supply from the start-up of new facilities is expected to weigh on olefin downstream products.

Preparations are also accelerating for the Shaheen project, a major investment project. Mechanical completion of key facilities has been completed, and commissioning is underway in stages. The project is targeting commercial operations in early 2027. S-OIL also plans to hold events in the fourth quarter of this year to mark its 50th anniversary and the completion of the Shaheen project.

This content was produced with the assistance of AI translation services.