Base Oils Not Affected by S-Oil Explosion

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One person died and nine were injured Thursday night in an explosion at S-Oil’s refinery in Onsan, South Korea.

The incident, which occurred as workers tried to restart operations following a temporary shutdown for maintenance, did not affect the refinery’s base oil plant, which was operating normally.

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According to reports by Yonhap News Agency and other South Korean news sites, the explosion occurred around 8:50 p.m. in an alkylation unit that blends feedstock for gasoline. The blast killed one subcontractor and sent nine others for hospital treatment, mostly for burns.

The incident triggered a fire that took more than 100 firefighters 20 hours to extinguish. S-Oil CEO Hussain A. Al-Qahtani held a news conference today in Ulsan where he apologized to the workers, their families and the community for the incident.

An individual with knowledge of the situation told Lube Report on condition of anonymity that the base oil plant was unaffected and is operating normally.

That will be a relief for base oil markets. S-Oil’s plant is the world’s largest, with capacity to make 2,122,000 metric tons per year of mostly API Group II and III base stocks. It makes S-Oil a major merchant suppliers of those stocks to markets around the world. The company has supplied significant volumes to several of the world’s largest finished lube markets, including the United States, China and India.

The global base oil market is ill-prepared at the moment for a large supply shock. Base oil prices are at historic highs because of sky high crude oil costs and tight supply that has created shortages for a number of grades in different parts of the world.

There was speculation today that the incident may impact gasoline supplies. The refinery is one of the largest fuel sources in South Korea, and S-Oil said it suspended operations for four units involved in fuels production. The company said it was still working to determine the extend of damage.