Profits Up at SK, S-Oil, Lanka IOC


Profits Up at SK, S-Oil, Lanka IOC

South Korean base oil refiners SK Lubricants and S-Oil reported strong increases in profit for the quarter ending Dec. 31 and for full year 2021. Meanwhile, profits and revenue also rose for Sri Lanka’s Lanka IOC


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SK Innovation’s base oils and lubricants segment reported ₩919 billion South Korean won (U.S. $765 million) in operating profit last year, a massive 250% increase from ₩262.2 billion in 2020. Full-year 2021 sales reached ₩3.1 trillion, a 29% increase from ₩2.4 trillion.

In the fourth quarter, the segment’s operating profit hit ₩268 billion, a 114% improvement from ₩125.3 billion in the same period in 2020. Sequentially, the operating profit was down 19% from the third quarter. This occurred despite higher sales volume, as rising costs and declining selling prices put downward pressure on the base oil pricing margin, SK said in its earnings presentation.

In its 2022 lubricants outlook, SK said it expected the base oil pricing spread – the product price spread between base oil and high sulfur fuel oil prices in Asia – to be adjusted as the petroleum products crack improves, and global base oil supply returns to normalcy, easing tight supply. The petroleum products crack is the theoretical refining margin.

Fourth-quarter sales topped ₩1 trillion, a 59% increase from ₩652 billion.

The company makes Group II and III base oil at its plant in Ulsan, South Korea. A joint venture with Pertamina makes Group III base oil in Dumai, Indonesia, while another with Repsol produces Group II and III base oil at a plant in Cartagena, Spain.


S-Oil reported ₩1 trillion South Korean won in operating profit in 2021, a 136% jump from ₩425.3 billion in the previous year. Revenue for the full year rose 96% to ₩2.6 trillion, up from ₩1.3 trillion won.

For the quarter ending Dec. 31, the segment posted ₩239.6 billion in operating income, 118% higher than ₩110.1 billion. The segment’s revenue for the fourth quarter reached ₩718.8 billion, 99% higher than ₩361.7 billion.

In its earnings presentation, S-Oil noted that the product spread between base oil composite prices and high-sulfur fuel oil averaged $57.70 in the fourth quarter, after peaking at $81.90/bbl during the second quarter. The composite base oil price includes Group I stocks. In describing the fourth quarter market environment, S-Oil noted this change indicated that the overall base oil price spread remained at a high level in the further quarter compared to pre-pandemic levels, on the back of healthy demand for highly refined base oils, although it noted the spread retreated further from the historic record level in the second quarter amid eased tightness in supply.

The company said in its earnings presentation’s 2022 outlook that it expected overall base oil fundamentals to “stay robust continuously thanks to strong demand for high quality products, even though supply will increase as operation rates are likely to be higher.”

S-Oil makes API Group II and Group III base oils at its plant in Onsan, South Korea.

Lanka IOC

Lanka IOC PLC reported 889.7 million Sri Lankan rupees (U.S. $4.4 million) in net profit for its third fiscal quarter ending Dec. 31, a 30% improvement from Rs 686.9 million from the same quarter in 2020.

Revenue for the quarter rose 39% to Rs 23 billion, compared to Rs 16.6 billion. Lanka IOC is a subsidiary of India’s public sector utility Indian Oil Corp.

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