S-Oil Corp, South Korea’s third-biggest oil refiner, said it aims to more than double its operating profit to two trillion won ($2.09 billion) by 2010.

S-Oil, 35 per cent owned by Saudi Aramco, also said it aimed to raise sales by two thirds to 20 trillion won by 2010, by boosting refining capacity by 70 per cent to one million barrels per day (bpd).
In April, S-Oil’s board approved a $3.74 billion project to build a 480,000 bpd refinery, on top of the existing 580,000 bpd refinery. The second plant would make it the country’s number-two refiner after SK Corp.
The project is also South Korea’s first new crude oil facility since 1996, one of several new plants planned in Asia this decade as margins have been boosted by tight global oil supplies, after years of poor profitability.
“In 2010, we’ll have a refining capacity over one million bpd, (and) retain our No 1 ranking in the upgrading facilities ratio,” S-Oil CEO Samir A Tubayyeb said in the statement.
Tubayyeb also said S-Oil was seeking to construct a second bunker-C cracking centre by 2010, adding to the current 290,000 bpd bunker-C cracker.
S-Oil, which receives all of its crude oil from Saudi Arabia, earned an operating income of 888.5 billion won on sales of 12.2 trillion won in 2005.
S-Oil Corp posted 231 billion won ($240.2 million) in second-quarter net profit, Nomura Securities said in a research note.
The quarterly profit marks a 62 per cent increase from a year earlier and is higher than a 199.2 billion won profit forecast from Reuters Estimates.
S-Oil Corp has also received a local government permit for its 3.57 trillion won ($3.76 billion) project to build a 480,000 barrel-per-day (bpd) refinery in the west of the country.
Despite the local government approval, industry sources were sceptical about S-Oil’s target to complete the main crude distillation unit and two secondary units by 2010 due to its financing.
“We received the permit in early July,” a company spokesman said.
The project in Sosan, approved by the company board in April, will boost S-Oil’s total capacity by 83 per cent and make it the country’s number-two refiner after SK Corp.
The plan includes two secondary units: a 75,000-bpd residual fluid catalytic cracker (RFCC), which processes fuel oil into gasoline, and a 75,000-bpd hydrocracker that processes fuel oil into diesel and kerosene.
The S-Oil expansion would be South Korea’s first new crude oil facility since 1996, one of a multitude of new plants planned in Asia this decade as margins have been boosted by tight global oil supplies after years of poor profitability.
By contrast, no refineries have been built in top oil consumer United States for about 30 years as environmental and planning regulations hinder new builds.
S-Oil, 35 per cent-owned by Saudi Aramco, has been seeking a buyer for a 28.4 per cent stake held as treasury stock, as its chairman said in March that the company planned to sell it to a strategic partner.
The sale will raise at least three trillion won based on S-Oil’s current share prices, analysts said.
South Korean conglomerates Lotte Group and Hanwha Group have been named as potential buyers of the stake, but no progress has been made yet.
“It will be difficult for Lotte to make an investment in S-Oil, because it plans to strengthen its retail business,” said Hwang Kyu-won, analyst at Tong Yang Investment Bank.