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UPDATE 2-SK Innovation sees refining margins staying healthy in 2017
February 3, 2017 / 8:20 AM / 10 months ago

UPDATE 2-SK Innovation sees refining margins staying healthy in 2017

* Expects 2017 refining margins to stay strong

* Says regional demand to support diesel, gasoline margins in 2017

* Sees Q1 gasoil, fuel oil cracks remaining firm

* Plans less scheduled maintenances in 2017 (Adds PIX to slug)

By Jane Chung

SEOUL, Feb 3 (Reuters) - Refining margins will stay firm in 2017, backed by limited additions to refined product supplies and solid demand growth, SK Innovation, which owns South Korea’s top refiner, said on Friday.

The comments came a day after the country’s third-largest refiner, S-Oil Corp, also said 2017 refining margins were expected to remain firm, buoyed by growing demand for oil products in Asia.

Strong regional demand is expected to help keep refining margins for diesel and gasoline strong, despite rising Chinese exports of diesel and high stocks of gasoline the United States, SK Innovation said.

“Firm refining margins are expected, due to limited global refining capacity additions against solid demand growth,” the company, which owns refiner SK Energy, said in an earnings statement.

Gasoil cracks - a measure of refining margins - are expected to hold steady in the first quarter, supported by winter demand from the United States and Europe, Lee Yunhi, head of SK Energy’s planning office, told analysts in a call.

Lee also said fuel oil demand for power generation and bunkering purposes would keep fuel oil cracks strong in the first quarter.

Fewer episodes of scheduled maintenance are planned in 2017, as the company did large-scale maintenances in 2016, a company official said, without giving further details.

SK Innovation operated its crude distillation units in the cities of Ulsan and Incheon at 83 percent on average in the fourth quarter of 2016, down from 85 percent a quarter earlier, the company said in the statement.

Operating income jumped 177 percent to 849.4 billion won ($741.13 million) in the fourth quarter of 2016 from a year ago. The company posted 3.23 trillion won of operating income in 2016, up 63 percent from a year earlier.

$1 = 1,146.0900 won Reporting By Jane Chung; Editing by Tom Hogue and Clarence Fernandez

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