At SK Lubricants, first-quarter operating profit fell to 100 billion won (U.S. $88.4 million) from 130.6 billion won a year ago, a decrease of 23 percent. Sales, however, rose to 737.4 billion won from 672.9 billion won, up 9.6 percent.

Production cost increases from rising oil prices and a decrease in off-season demand were identified in SKs quarterly earnings presentation as the cause ofthe “temporary”decline in base oil margins.Seoul-based SK anticipates that base oil margins will improve due to the effect of passing on higher crude oil prices, according to the companys quarterly earnings presentation.

SK operates a 21,000 barrel per day API Group II and Group III base oil refinery in Ulsan, South Korea.The SK-Pertamina joint venture plant in Dumai, Indonesia, which SK owns a 65 percent share, has about 7,000 b/d of Group III capacity.

SK Innovation and JX Nippon Oil & Energy are building a joint venture base oil plant at SKs Ulsancomplex. About 550,000 metric tons per year of Group III base oil capacity is expected to be on stream beginning next month, with an additional 580,000 tons per year of Group II capacity projected for 2013. And SK Lubricants is partnering with Repsol YPF on a new 13,000 b/d Group II/III base oil plant at Repsols Cartagena, Spain, refinery. It is scheduled to begin production in 2014.

At S-Oils lubricants business segment, first-quarter operating income fell to 100.6 billion won from 130.5 billion won in the year-ago quarter, down 22.9 percent. Revenue climbed to 630.1 billion won from 512.3 billion won, an increase of 23 percent.

S-Oil, headquartered in Seoul, anticipates a slight recovery in its operating profit, according to its quarterly report. S-Oil expects the Group III base oils market to remain healthy in developed countries, while steady growth in Group II demand in Asia is expected because of on-going industrialization.

S-Oils Onsan, South Korea, refinery has 15,000 b/d Group III,20,000 b/d of Group II and 500 b/d of Group I capacity.