Profits Jump for Korean Base Oil Refiners


Profits Jump for Korean Base Oil Refiners

South Korean base oil refiners SK Lubricants, GS Caltex and Hyundai Shell Base Oil, along with Thai Oil’s lube base oil business, all recorded much higher profits for the quarter ending March 31, compared to the same period in 2020.


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SK Innovation’s base oil and lubricants segment reported operating profit of 137.1 billion South Korean won (U.S. $121.2 million) for the first quarter, a 374% improvement from ₩28.9 billion for the first three months of 2020.

In its earnings presentation, the company said it anticipated that global base oil supply will remain tight in the second quarter, with a seasonal increase in demand expected.

Sales in the first quarter for the base oil and lubricants segment edged down 1% to ₩636.2 billion.

SK Innovation announced on April 29 an agreement to sell 40% of the SK Lubricants business to IMM Private Equity, a South Korean investment firm, for a bit less than U.S. $1 billion. SK Innovation has said it would use proceeds to support its growing electric vehicle battery unit.

GS Caltex

GS Caltex of South Korea reported that operating profit jumped 86% to ₩125 billion for its base oil and lubricant business in the first quarter, improving from ₩67.2 billion in 2020’s first quarter.

Revenue for the quarter increased 13% to ₩358.5 billion, up from ₩317.8 billion.

The 50-50 joint venture between GS Group and Chevron Corp. has capacity to produce 1.3 million tons per year of base oil at its plant in Yeosu.

Hyundai Shell Base Oil

Hyundai Shell Base Oil reported operating profit of ₩103 billion for the first quarter, a 338% increase from ₩23.5 billion in the same period in 2020.

Sales increased to ₩307.7 in the quarter, up 71% from ₩180 billion won.

The 60-40 joint venture between Hyundai Oilbank and Shell produces only API Group II base oil.

Hyundai Oilbank noted in its first-quarter analysis that base oil supply decreased in the global market as refineries ran at low utilization rates due to a weak refining margin and the cold wave in Texas. The company observed that base oil demand stayed firm in major importing countries.

Thai Oil
Thai Oil’s base oil business reported that its net profit grew 181% to 797 million baht (U.S. $25.4 million) for the first quarter, rising from 284 million baht in the same period last year.

Base oil sales revenue was up 28% at 5 billion baht, from 3.9 billion baht in the year-earlier period. The company attributed the increase mainly to higher average unit selling prices.

Thai Oil said in its earnings presentation that the price for 500 solvent neutral and its spread over fuel oil prices increased both sequentially from 2020’s fourth quarter and year on year from 2020’s first quarter, thanks to a continuous decrease in regional supply because of production cuts at regional refineries during the COVID-19 pandemic. “Moreover, a recovery of Asian demand after better weather led to higher lube base oil demand for marine transportation,” the company stated.

Thai Oil’s plant in Si Racha, Thailand, posted a base oil production rate of 93% during the first quarter, up from 81% in the same period last year. Base oil production volume for the quarter increased 98% to 170,000 metric tons.

The company operates a base oil plant with 267,000 t/y of API Group I production capacity. The base oils are mainly used in industrial and marine lubricants and in engine oils for older engines.