SEOUL: South Korea's S-Oil Corp said on Thursday it expects refining margins to stay solid in the April to June quarter, as low oil prices will offset much of the impact from seasonally weak demand in Asia.
S-Oil, whose main shareholder is Saudi Aramco, the kingdom's state oil giant, said its first quarter operating income jumped 106 percent to 491 billion won ($432 million) from a year ago, helped by strong margins and maximized production rates.
"Regional demand is likely to contract as heating demand in Asia will disappear, but low oil prices will hold the demand at a firm level," the country's third-largest refiner said in an earnings statement. S-Oil, which imports almost all of its crude from Saudi Arabia, said it plans to shut its No.1 crude distillation unit and residue fluid catalytic cracking unit in the second half of this year.
A senior company official told an earnings call that gasoline margins will begin to rebound from May when the driving season starts, noting that gasoline stocks are higher now than a year ago.
The recent failure by major oil exporters to reach a deal to freeze output is "positive and advantageous" for Asian oil importers, he added, as crude oil prices were set to stay low for a while.
S-Oil shares were trading up 1.6 percent as of 0235 GMT, ahead of a 0.6 percent rise in the wider market.
Kim Jun, chief executive of the country's largest refiner, SK Energy Co Ltd, told reporters on Wednesday that fuel supply is likely to outstrip demand in the medium to longer terms and put pressure on refining margins if the current low oil price continues.
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