May 19 (Reuters) - South Korea's third largest refiner,
S-Oil Corp, has suspended production of several
processing units after a blast at its Onsan refinery, it said on
Friday, a step that could tighten gasoline supplies and boost
refiners' margins in Asia.
S-Oil, a key exporter of products that is majority owned by
Saudi Aramco, has suspended outputs at the units in
the city of Ulsan as a precaution since they were near the
resulting fire, the company added in a regulatory filing.
These are its No.2 alkylation unit and nearby processing
units, such as the No.2 residue fluidized catalytic cracking
(RFCC) unit and the No. 2 paraxylene (PX) unit, it said.
"We are exploring best solutions to make sure this does not
cause any interruption in domestic supply of fuel products,"
Chief Executive Hussain Al-Qahtani told a news conference.
The company will make full use of inventory and its domestic
and overseas network in that effort, he added.
The shutdown following Thursday night's blast that killed
one person is expected to affect already tight gasoline supplies
in Asia, where S-Oil is a key exporter.
It may push up Asian refiners' margins of the fuel, already
hovering near an all-time high of close to $34 a barrel.
S-Oil runs two alkylation units, with a combined capacity of
9,200 bpd, to produce alkylates that are blended with gasoline
to boost its octane levels and quality.
Citi analysts expect S-Oil's gasoline output to be "severely
impacted" in the near term, although it could buy alkylate to
It may take up to two years to replace the fire-hit unit,
during which time S-Oil could export Very Low Sulphur Fuel Oil,
the bank's analysts said in a note.
One person died and nine were injured in the blast, an Ulsan
fire official said on Friday.
(Reporting by Arpan Varghese in Bengaluru, Joyce Lee and
Heekyong Yang in Seoul; Editing by Florence Tan and Clarence